Restitution may be the most important issue that most criminal defense lawyers are uninterested in litigating. Folks who practice in the criminal space – even the white-collar space – tend to see themselves as a champion of liberty. They care about freedom and justice. They are significantly less interested in fighting over money.
Nonetheless, money is an important thing in many people’s lives. And, if a person is convicted of a crime, the government will try to take their money too – either through a fine, a forfeiture judgment, or restitution.
The Second Circuit, in United States v. Cuti, recently narrowed the scope of what expenses can be part of a restitution judgment.
Anthony Cuti was the CEO of Duane Reade until 2005. He was convicted of securities fraud after trial in connection with two accounting fraud schemes to inflate the company’s earnings. His conviction was upheld in a separate appeal – that’s not the issue in this case.
This case is all about the Benjamins.
Mr. Cuti is Fired
In 2004, Duane Reade was purchased by Oak Hill — a private equity firm. Mr. Cuti was terminated shortly after in 2005.
As sometimes happens, Oak Hill and Mr. Cuti did not agree on all of the details of how his termination should be sorted out. The case went to arbitration. Paul Weiss represented Duane Reade in the arbitration.
Shortly before the arbitration was started though, Duane Reade’s general counsel learned that there were some suspected shenanigans that involved Mr. Cuti.
The company hired Cooley to investigate.
It will surprise exactly no one that having Paul Weiss and Cooley do a bunch of legal work was really expensive.
Continue reading →