Your investigative work had paid off: the suspect is now a defendant. Now what happens?  

This article is excerpted from the Fraud Examiners Manual, 2.404 - 2.409, Third Edition Updated 2000-2001 © 2000 Association of Certified Fraud Examiners. 

A person under arrest must be brought before a magistrate without "unnecessary delay." At this time, the arresting officer must swear to a complaint, establishing probable cause, if the arrest was without a warrant. The defendant will then be advised of the nature of the complaint, of the right to retain counsel or to be appointed counsel, and of the general circumstances under which pretrial release may be obtained.

The Eighth Amendment prohibits "excessive bail." The Supreme Court has recently held that the amendment doesn't absolutely require pretrial release, only that if bail is appropriate, it be set no higher than necessary to assure the defendant's presence at trial. Bail may be denied and the defendant held in custody if the judge decides release would pose a serious threat to the safety of the community or to a particular individual, or that no amount of bail or particular conditions of release would prevent the defendant from fleeing.

At the initial appearance, a defendant who hasn't yet been indicted also is informed of his right to a preliminary examination. This is a formal, adversary hearing, before a judge, at which the defendant may be represented by counsel and can cross-examine witnesses. The purpose of the hearing is to determine whether there is probable cause to hold the defendant for further proceedings, not to establish guilt or innocence. Because of its limited purpose, hearsay and even illegally obtained evidence can be admissible. Motions to suppress must be made to the trial court.

If the magistrate determines at the preliminary examination that there isn't probable cause, the complaint will be dismissed and the defendant released. The government may, however, institute a subsequent prosecution for the same offense, presumably with better evidence. Preliminary examinations often are used by defense counsel as an opportunity to get free "discovery" of the details of the prosecution's case. For this reason, some prosecutors prefer to obtain a grand jury indictment. An indictment is held to satisfy the probable cause requirements of the Fifth Amendment, and precludes the need for the preliminary examination.

The Grand Jury

The grand jury consists of 16 to 23 people sworn as jurors who meet in secret deliberation usually in biweekly or monthly sessions to hear witnesses and other evidence presented by prosecutors and to vote on indictments. An indictment or true bill must be concurred in by at least 12 jurors voting without the prosecutor present.

The hearing is a non-adversarial proceeding. The accused has no right to be informed of its deliberations, to know the evidence against him, or to confront the accusers. The accused also has no absolute right to appear before it, and if he does, may not be accompanied by counsel. The accused may, however, periodically leave the grand jury to consult with the attorney.

These severe limitations on the rights of the accused are thought by some to be justified on the grounds that they are necessary to investigate criminal activity effectively, that the grand jury has only the power to accuse, not to convict the defendant. The defendant, if indicted, has full constitutional protections at trial. The grand jury's power had been severely criticized by many legal and public interest groups. Abuse of its processes can do severe damage to innocent parties, particularly public figures to whom an indictment alone can be devastating. For this reason, defense counsel in major white-collar cases now often begin their defense at the grand jury stage to try to convince prosecutors not to indict - rather than waiting - as was traditionally the case, until an indictment is returned.

The grand jury has the right to subpoena witnesses and documents, and refusal to appear or produce may be punishable as contempt, with fines or jail terms until the subpoena is complied with, or the grand jury expires. A witness or target of the grand jury retains the Fifth Amendment right against self-incrimination.

A grand jury may be used to obtain evidence of possible violations of the criminal law, and its process may not be used as a ruse to obtain evidence for parallel civil actions. A common example of such parallel proceeding would be investigation of possible anti-trust violations. The grand jury, however, with the appropriate court order, may make evidence available to the proper government authorities for a civil proceeding, as long as the primary purpose of its inquiry was to enforce the criminal laws. Access by private parties through court orders to grand jury evidence for use in private civil proceedings is unlikely to be granted because of secrecy requirements, unless substantial need is demonstrated.

Immunity

In the course of a grand jury investigation or a criminal trial the prosecution may apply for a court order compelling testimony from a witness under a grant of immunity. Because immunized testimony from a witness can't be used against the witness in any criminal proceeding, such an order doesn't violate the Fifth Amendment right against self-incrimination.

Although it's legally permissible to prosecute an immunized witness on the basis of other testimony and evidence, as a matter of practice this is seldom done because of policy considerations and the difficulty of demonstrating - as the law requires - that the subsequent prosecution wasn't in any way based on the compelled testimony.

A decision to immunize a witness is solely within the discretion of the prosecution. If the application meets statutory requirements, the court must grant the order. If the immunized witness refuses to testify - out of fear of reprisal or for any other reason - the witness will be found in contempt and jailed until he agrees to testify or the grand jury term expires. The witness can then be summoned before a new grand jury and the process repeated indefinitely or until a judge decides that there isn't a possibility that further incarceration will induce cooperation.
An immunity order protects the witness only from prosecution from past crimes about which testimony is compelled; other undiscovered crimes aren't covered, nor is the witness immune from prosecution for perjury based on the immunized testimony. Such testimony also may be used against the witness in a civil proceeding.

Indictment and Information

In the U.S. federal system, all offenses punishable by death must be charged by indictment; all felonies (generally crimes punishable by imprisonment for a year or more) must be prosecuted by indictment, unless the defendant waives the requirement, in which case the prosecution may proceed by the filing of an "information." An information is a charge signed only by the prosecutor without the involvement of the grand jury. A misdemeanor may be charged by either an indictment or information.

Arraignment

A defendant named in an indictment, if not already in custody, may be arrested on a warrant. More often in white-collar cases, the defendant is summoned to appear before a magistrate at a stated time and place to be arraigned. The arraignment must take place in open court, and consists of the reading of the indictment or information to the defendant and calling on him to plead. The defendant may plead guilty, not guilty, or nolo contendere. A plea of nolo contendere means the defendant doesn't contest the charges, without formally admitting or denying them. A defendant may pleas nolo only with the consent of the court. If accepted, a nolo plea is the same as a plea of guilty for purposes of punishment, but can't be used as a formal admission of guilt. This makes it a favored plea for corporate defendants facing subsequent civil litigation.

Before the court will accept a guilty plea, it must follow procedures to ensure that the plea is voluntary and accurate; that is, there is a "factual basis" for the plea. This usually means that the defendant must admit to committing acts that satisfy each element of the offense. In some circumstances, however, a defendant may be allowed to enter an Alford plea (named after the Supreme Court case that upheld the practice) under which he pleads guilty, although continuing to assert innocence. Such a plea may be made to obtain the benefits of a plea agreement and to avoid potentially more dire consequences, such as the death penalty, if the defendant is convicted after trial. Before the Court accepts an Alford plea, it must satisfy itself that there is strong evidence of guilt and that the defendant understands the consequences. A plea of not guilty sets in motion the adjudicative process described below.

Prosecutorial Discretion and Plea Bargains

Whether criminal cases are actually brought to trial might depend on prosecutorial discretion, meaning that the decision to prosecute is left to the discretion of the appropriate jurisdictional authority. Prosecutors exercising this discretion consider issues like the potential for deterrence, the strength of the available evidence, and the resources (time, labor, money) incurred by going to trial. The question is partly about the chances for a guilty verdict, but also about the cost and demands of achieving that verdict.

According to federal statistics, about 84 percent of the people arrested are prosecuted; 62 percent of these are convicted, and 34 percent are incarcerated. Cases can be handled through plea bargains or cooperative agreements in exchange for assistance, so it's difficult to say, statistically, how "successful" prosecutorial efforts have been. But when public officials take a case to court, they're generally armed and ready. Of those cases that do go to trial, more than 90 percent end in conviction.

High-level crimes, especially those involving public figures, may require special approval (from the U.S. Department of Justice, for example) for being tried or declined. White-collar crime is sometimes prosecuted on the basis of declination guidelines that set out dollar amounts below which cases aren't accepted. A prosecutor's office might decide, for example, that securities frauds of less than $500,000 won't be brought to trial. Because of the immense effort required to prosecute many fraudulent acts, prosecutors have to weigh the cost and exertion of going to court versus the amount available for recovery. Accordingly, many businesses are turning to civil action to redress fraud. As the criminal courts become more jammed, companies can often speed up the process by filing their own civil actions. Although the perpetrator can't be given jail time as a result of a purely civil action, he can be ordered to pay back the ill-gotten funds.

Prosecuting attorneys also have the power to settle charges with a plea bargain arrangement, avoiding the expenditures of time and effort involved at trial. About 90 percent of criminal defendants never go to trial, opting instead for a deal. Critics have charged that the plea privilege is abused by cynical prosecutors, and leads to dangerous offenders being released quickly and without retribution.

The U.S. Supreme Court disagrees. A majority decision in 1971 declared that the plea bargain is a "highly desirable" part of the justice system because it "leads to prompt and largely final disposition" in most cases; it "avoids much of the corrosive impact of enforced idleness" suffered by defendants who aren't released on bail; it reduces the charges that an accused person will commit a crime while free on bail; and it "enhances whatever may be the rehabilitative prospects" of the guilty by "shortening the time between charge and disposition" [Santabello v. New York, 404 U.S. 257, 261 (1971)].

Plea bargains also can be a boon to offenders. Some are released from any prosecution whatsoever, and others receive lesser charges. In a study of white-collar criminals, more than 42 percent of cooperating defendants were charged with just one violation of the law, while only 30 percent of noncooperating defendants were so lucky.

Once charges are filed against them, white-collar defendants are more like likely to insist on a trial than other offenders. On average, considering all federal indictments, only about 10 percent of those accused plead not guilty and proceed to trial. But more than 18 percent of defendants in white-collar cases (nearly double the average) insist on their trials. People accused of securities fraud are especially likely to demand their days in court, with well over half of these defendants pleading not guilty.

The Burden of Proof in Criminal Trials

In criminal cases, the verdict must be based on assurance beyond a reasonable doubt. The civil trial requires only a "preponderance of the evidence" to support a decision, but criminal trials are tougher. Plainly put, the law instructs jurors and judges hearing criminal cases to be as sure as they possibly can that the defendant committed the acts as charged. In purely philosophical terms, there might always be room for doubt ("Well, did he really…?").

Fraud charges can be especially hard to prove because the evidence is by its nature overwhelmingly circumstantial, i.e. composed of documents and their interpretation versus the testimony of eyewitnesses. But arch skepticism is hardly practical in making necessary legal decisions. Deciding "beyond a reasonable doubt" entails making the most assured judgment possible based on the evidence as presented. The appeals process recognizes that more than one examination of the charge(s) might be necessary to ensure an accurate, fair-minded verdict.

The prosecution, as most people remember from high school civics, is responsible for proving the charges against the defendant. The U.S. Constitution guarantees that the accused is presumed innocent until the prosecution shows otherwise.

Pre-trial Motions in Criminal Court
Criminal trials, like civil proceedings, often begin with pre-trial motions. Some of these are the same regardless of the type of court (civil or criminal). For example, both criminal and civil defendants can make motions in limine to exclude certain evidence, can ask that the charge or complaint be made more definite and certain, or can request a postponement of the trial date. Other motions are particular to the criminal process.

Following are some pre-trial motions typically used in criminal trials:

• Motion for Severance Sometimes defendants in a large case are tried at the same trial. This motion asks that the defendants be tried separately, or at least that this particular defendant's trial be conducted separately.
• Motion to Suppress Evidence argues that evidence was improperly obtained, is impertinent or unduly prejudicial, or violates some other right such as the privilege against self-incrimination. In many cases motions to exclude evidence - decided at a suppression hearing, where the judge (without a jury) rules on the propriety of the government's conduct - are more important that the trial itself. If the defense is able to exclude illegally seized narcotics, or a tainted confession, or critical books and records, the prosecution might be forced to dismiss the charges (at least temporarily) for lack of adequate proof. On the other hand, an unsuccessful suppression motion might be followed by renewed interest by the defendant in a plea bargain.
• Motion for a Change of Venue asks to move the trial to another court because the defendant cannot receive a fair trial due to public prejudice.

Motion to Dismiss

There are several grounds upon which a defendant may request that the indictment be dismissed.

• Speedy Trial The indictment may be dismissed for violations of a defendant's right to speedy trial, when the trial date exceeds a certain amount of time after the charge (usually 70 days). A related basis for the motion is alleging pre-indictment delay, when, for example the prosecution took an excessively long time in bringing the indictment.
• Selective Prosecution When multiple perpetrators are involved in a criminal act, a defendant may claim "selective prosecution," accusing the authorities of targeting some individuals and exonerating others without cause. Defendants also may allege "vindictive prosecution." If after being exonerated on one charge, a person is charged with another, more serious charge, the individual may claim vindictive prosecution.
• Double Jeopardy The "Double Jeopardy" clause of the Fifth Amendment - which prevents someone from being tried for the same crime twice - may be used to request a dismissal. Dismissal motions also may claim that the indictment is invalid because it's based on evidence that's tainted, insufficient, or illegally seized.
• Challenging the Sufficiency of the Indictment Rule 7 of the Federal Rules of Criminal Procedure requires the indictment to be a plain, concise, but definite statement of the essential facts constituting the charge(s) against the defendant. As previously discussed, the indictment must, therefore, allege all of the essential elements of the crimes charged, including the requisite criminal intent where required by statute. If the indictment is deficient, then the defense can challenge it. The defense may challenge the indictment if the prosecution failed to plead an essential element of the fraud offense or plead the necessary facts.
  For example, if a defendant is charged with mail fraud, the indictment must specifically describe the details of the fraudulent scheme perpetrated through the use of the mail and must set forth the false representations. (See United States v. Hess, 124 U.S. 483 [1888].) If the indictment fails to do this, the court will dismiss the indictment. However, the victory might be short-lived. Even though the indictment is dismissed, the prosecution usually is free to refile the indictment.
• Duplicity Rule 8(a) of the Federal Rules of Criminal Procedure requires that each count of an indictment state one and only one offense. Ac count that charges two or more offenses is duplicitous. Unfortunately, what constitutes a single offense often is hard to determine with white-collar criminal statutes. Single and continuing offenses, committed for several objectives or by multiple means, like mail or wire fraud or conspiracy, may be charged in one count, although they alternatively could be charged as separate and distinct counts. Generally, however, if the separate violations are all a part of the same criminal scheme, they can be alleged in the same count. This is sometimes preferable for the defendant because if all the violations are alleged in one count, it looks to the jury as if the defendant has committed one fraud rather than 50 separate frauds.
• Multiplicity is the opposite of duplicity. It occurs when two or more counts charge essentially the same offense thereby exposing the defendant to cumulative punishment for one offense. It's in essence being charged twice for the same offense, which exposed the defendant to double the punishment.

Discovery

Both the defendant and prosecution have statutory rights to certain pre-trial discovery. The defendant may inspect copies of all relevant statements made by him (or, if a corporation, by its employees) in the custody of the government, a copy of the accused's prior criminal record, and all documents, items, test results, and other evidence the government intends to introduce at a trial or that are necessary to the defense. The defendant doesn't, however, have an absolute right to see copies of prior statements made by a witness against him until such witness testifies at trial. In many cases, however, particularly fraud prosecutions where there is less risk of reprisal or tampering with witnesses, the government may voluntarily produce these statements before trial.

Discovery Under Rule 16

Federal Rule of Criminal Procedure 16 identifies the information that each side must disclose. Generally, the defense is entitled to inspect and copy statements made by the defendant. The defense also may inspect the defendant's prior record, material documents, tangible objects, and examination and test reports.

If, and only if, the defendant requests discovery of documents and objects, or of examinations and test reports, the government may seek similar kinds of materials from the defense. Any items that must be disclosed are required to be disclosed "as soon as reasonably possible." The court may regulate the discovery process by entering protective orders or punishing the failure to provide the proper information timely.

The rule allows the defense to obtain statements of the defendant made to third parties, as well as government agents, if the statements were reduced to writing. Therefore, any written statements made by the defendant to the CFE investigating the case, if the statements were turned over to law enforcement or the government, must be produced. However, oral statements made to third parties (i.e. non-government agents) generally are protected from discovery.

Summary of Rule 16 Disclosure Requirements

Statements of the Defendant Upon the defendant's request, the government must disclose any relevant written or recorded statements made by the defendant. This includes written records of any relevant statements made by the defendant to a government agent, either before or after arrest, as well as any recorded testimony of the defendant made before a grand jury which relates to the offense charged.

The Defendant's Prior Record Upon the defendant's request, the government must furnish a copy of the defendant's prior criminal record, if it exists.

Documents and Tangible Objects Upon the defendant's request, the government must allow the defendant to inspect and copy or photograph any books, papers, documents, photographs, tangible objects, buildings or places which: 1) are material to the preparation of the defendant's case; 2) are intended for use as evidence at trial by the government; or 3) were obtained from the defendant or belong to the defendant.

Reports of Examinations and Tests Upon the defendant's request, the government must allow the defendant to inspect and copy any results or reports of physical or mental examinations, scientific tests, or experiments which are material to the preparation of the defense or which the government plans to use as evidence at trial.

Expert Witnesses Upon the defendant's request, the government must provide a written summary of the testimony to be given by its expert witnesses. This summary must include the expert's opinions, the basis of those opinions and the qualifications of the expert.

While the State has a broad duty to disclose evidence in criminal cases, there are limits to what it must turn over to the defense. The defendant doesn't have a right to the work product of the State, which includes reports, memoranda and other internal documents made by the government attorney in preparing for and prosecuting the case. In addition, the defendant doesn't have a right to inspect statements made by government witnesses prior to the time the witness actually testifies.

The Jencks Act

The Jencks Act, 18 U.S.C. § 3500, permits the defendant to obtain - prior to cross-examination - a government witness's prior statements (or positions thereof) that relate to the subject matter of his testimony on direct examination. However, the statute also protects statements from discovery until after the direct examination has been completed. The statements that must be produced include not only the written statements by the witness, but also may include notes or memoranda or government agents or prosecutors, which set forth what the witness said during interviews.

Exculpatory Information (Brady Material)

The prosecutor has ethical responsibilities not to use evidence that's false and must correct testimony that he knows is false. In 1963, the Supreme Court (in the case of Brady v. Maryland, 373 U.S. 83) expanded the prosecution's duty further. Under Brady, the prosecution must disclose all evidence requested by the defendant that's material to guilt or punishment, i.e., evidence that would tend to exculpate him or reduce his penalty. The government is expressly forbidden to conceal evidence that would call the charges into question.

Disclosures by the Defendant

Prosecution has similar privileges to learn the substance of the defense's case, the basis for the accused person's not-guilty plea. If the defendant requests disclosure of the prosecution's documents and tangible objects, reports of examinations and tests, and its expert witnesses, then the prosecution is correspondingly entitled to disclosure of these items from the defense. The prosecution is not, of course, entitled to disclosure of the defendant's work product, nor is it entitled to statements made by prospective witnesses to the defendant or his attorneys.