Gale Encyclopedia Of American Law 3Rd Edition Volume 8 P5 pptx

an acceptable site. Yucca Mountain, Nevada, is the only place earmarked for a site study. Solid waste pollution has been reduced by recovering resources rather than burying them. Resource recovery includes massive systems that burn waste to produce steam, but it also includes the recycling of glass, metal, and paper from individual consumers and businesses. The elim- ination of these kinds of materials from landfills has prevented pollution and extended the period during which landfills can receive waste. Land pollution also involves the accumula- tion of chemicals in the ground. Modern agriculture, which has grown dependent on chemical fertilizers and chemicals that kill insects, has introduced substances into the soil that kill more than pests. For many years the chemical DDT was routinely sprayed on crops to control pests. It was banned when scientists discovered that the chemical entered the food chain and was harming wildlife and possibly humans. Air pollution is regulated by the federal government. The CLEAN AIR ACT was originally enacted in 1970 and was extensively amended in 1977 and again in 1990 (42 U.S.C.A. §§ 7401– 7626; Pub. L. No. 95-95 [1977 amendments]; Pub. L. No. 101-549 [1990 amendments]). Under its provisions, every stationary and mobile pollution source must comply with emission standards as a means of cleaning up the ambient air quality in the area. This has meant that automobile emission control systems have been created and improved to meet more stringent air quality standards. Coal-burning electric power plants have been required to install filtration systems on their smokestacks, and manufactur- ing facilities have had to install equipment that “scrubs” polluted air clean. One strategy governmental entities use to control emissions involves emissions trading, or cap-and-trade. These programs provide eco- nomic incentives in exchange for reductions in emissions of air pollutants. Cap-and-trade has been used in several areas of the United States. Emissions trading is at the center of the Kyoto Protocol to the UNITED NATIONS Framework Convention on Climate Change, a treaty designed to reduce six major types of greenhouse gases. The United States is a signatory of the protocol but has never ratified it. Thus, the treaty is not formally binding on the United States. Water pollution has existed longer than any other type of pollution. Depositing liquid and solid wastes in rivers, streams, lakes, and oceans was convenient and in expensive for a company or municipality, but it eventually destroyed the ecosystems found in the water. Many large rivers became nothing more than sewers. Most troubling was the polluting of groundwater, creating serious health hazards for people who drank water containing toxic substances. The federal CLEAN WATER ACT (CWA) was originally enacted in 1972 and then amended in 1977 and 1987 (33 U.S.C.A. §§ 1251–1387; Pub. L. No. 95-217 [1977 amendments]; Pub. L. No. 100-4 [1987 amendments]). The CWA seeks to eliminate the “discharge of pollutants into navigable waters,” to make water safe for people to fish and swim in, and to end the “discharges of toxic pollutants in toxic amounts.” The CWA seeks to accomplish these goals through a variety of regulatory strategies. FURTHER READING Gotwold, Gregory. 2004. “Cap-and-Trade Systems, with or without New Source Review? An Analysis of the Proper Statutory Framework for Future Electric Utility Air Pollution Regulation” Vermont Law Review 28 (winter). CROSS REFERENCES Environment al Law; Environmental Protection Agency; Hazardous Substances; Land-Use Control; Solid Wastes; Toxic Pollutants. POLYGAMY Polygamy is the offense of willfully and knowingly having more than one wife or husband at the same time. The offense of willfully and knowingly entering into a second marriage while validly married to another individual is bigamy. The Crime The law in every state prohibits a man or a woman from being married to more than one living person at a time. The crime of having more than one current spouse is called bigamy (having two spouses), which is a subset of the crime of polygamy (having more than one spouse), and the law makes no practical distinc- tion between the two. Even in states that separately criminalize both polygamy and big- amy, either crime is commi tted when a married person first enters into an unlawful marriage with a sec ond person. However, additional marriages beyond the second would support prosecution for additional criminal counts and possibly a longer sentence. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 28 POLYGAMY Most states base their polygamy laws on the MODEL PENAL CODE section 230.1, whic h provides that a person is guilty of the third- degree felony of polygamy if he or she marries or cohabits with more than one spouse at a time in purported exercise of the right of plural marriage. The crime is punishable either by a fine, imprisonment, or both, according to the law of the individual state and the circumstances of the offense. The crime of polygamy is deemed to continue until all COHABITATION with and claim of marriage to more than one spouse terminate. Polygamy laws do not apply to ALIENS who are temporarily visiting the United States, pro- vided that polygamy is lawful in their country of origin. The existence of a valid marriage entered into by the DEFENDANT prior to the second valid marriage is an essential element of the offense in every jurisdiction. No particular type of cere- mony is required for the first or subsequent marriage before someone can be prosecuted for polygamy. Even persons who satisfy the re- quirement for a COMMON-LAW MARRIAGE can be prosecuted for entering a subsequent marriage that itself is either another common-law marriage or a traditional marriage. Cohabitation is not typically a requisite element of the offense. Merely entering into a second marriage with knowledge that one is currently married to another living person will support an INDICTMENT for polygamy. An indictment for polygamy will not be found unlawful even if the defendant of fers proof that his or her first marriage was a voidable marriage,, or one that is valid until annulled. If neither party to a voidable marriage success- fully voids the marriage by obtaining an ANNULMENT, then the remarriage of either constitutes polygamy. Ordinarily the state in which the polyga- mous marriage occurred has jurisdiction over prosecution of the crime. Some statutes, how- ever, provide that the accused may be convicted in the state where the polygamous cohabitation takes place, even though the marriage occurred elsewhere. For example, California law provides that “when the second marriage took place out of this state, proof of that fact, accompanied with proof of cohabitation thereafter in this state, is sufficient to sustain the charge” (Cal. Pen. Code § 281). Defenses Under certain statutes it is not considered polygamous for an individual to remarry after a certain period of time has elapsed during which the former spouse was absent and thought to be dead. For example, California exempts from its law “any person by reason of any former marriage whose husband or wife by such marriage has been absent for five successive years without being known to such person within that time to be living” (Cal. Pen. Code § 282). Remarriage before the expiration of the statutory period, however, constitutes polygamy, even if it is later learned that the missing spouse is dead, since the first marriage is still regarded as valid until the statutory period lapses. In some jurisdictions, a sincere and reason- able belief that a valid DIVORCE has been granted is a defense to polygamy. In most jurisdictions, however, it is not a defense. It is sometimes said that polygamy is a strict-liability offense because the prosecution need not prove a criminal intent to obtain a conviction, and defendants may not rely on erroneous legal advice, ignorance, or mistake law as a defense. However, prosecutors are more likely to pursue indictments against persons who knowingly enter into a polygamous marriage than against persons who enter a second marriage under a GOOD FAITH belief that their first marriage has been nullified. As mentioned above, a person who success- fully annuls his or her first marriage before entering a second marriage cannot be prose- cuted for polygamy. The same rule applies to persons who successfully have their marriage dissolved by divorce or nullified for any other reason before entering the second marriage. Tom Green, shown here with his five wives and 25 children, was found guilty of four counts of bigamy and one count of failure to pay child support in May 2001. The case marked Utah’s first polygamy trial in 25 years. AP IMAGES GALE ENCYCLOPEDIA OF AMERICAN LAW, 3 RD E DITION POLYGAMY 29 However, a divorce or annulment obtained subsequent to a second polygamous marriage is no defense. Nor will a solemnly held religious belief that it is not unlawful to have more than one spouse serve as a defense to an indictment for polygamy. In affirming the criminal convic- tion of a Mormon for practicing polygamy, the U.S. Supreme Court rejected the argument that a Utah law prohibiting polygamy violated either the establishment or free exercise clauses of the FIRST AMENDMENT to the federal Constitution (Reynolds v. United States, 98 U.S. (8 Otto) 145, 25 L. Ed. 244 (1978). Origins of Anti-Polygamy Laws The ban on polygamy originated in English common law. In Eng land polygamy was repudi- ated because it deviated from Christian norms; marriage, it was believed, properly existed only between one man and one woman. In 1866, for example, in the seminal case of Hyde v. Hyde (1 L.R P. & D.), an English court remarked that “the law of [England was ] adapted to the Christian marriage, and it is wholly inapplicable to polygamy.” During the nineteenth century, English and U.S. law did not recognize polyga- mous marriage in any form. Only in the late twentieth century has either nation given limited legal recognition to polygamous partners from other countries. Anti-polygamy laws in the United States also sprang from religious conflict. In the mid- 1800s widespread public hostility arose toward the practice of polygamy by members of the Church of Jesus Christ of Latter-day Saints (LDS Church), known as Mormons. A small religious sect in the territory of Utah, the Mormons believed that their founder and prophet, Joseph Smith, had a divine revelation in 1843 that called for men to marry more than one woman; in 1852, the church announced that the practice was religiously superior to monogamy. This position angered critics throughout the United States, ranging from religious lead ers to nove- lists, editorialists, and particularly politicians. In 1856, the Republican Party’s first national platform denounced polygamy and SLAVERY as “those twin relics of barbarism.” Legal controversies over the propriety of prohibiting polygamous marriages persisted in the United States for 150 years and were expected to continue as long as sects within the Mormon religion continued to openly support the practice of plural marriage. The LDS Church, however, disavowed polygamy in 1890 and excommunicates those members who practice plural marriage. A fundam entalist derivative of the Morman Church, known as the Fundamentalist Church of Jesus Christ of Latter Day Saints (FLDS Church), was formed by former members of the LDS Church, who left after it denounced the practice of plural marriage. In a highly publi- cized case in 2007, Warren Jeffs, the leader of the FLDS Church, was convicted of being an accessory to two counts of RAPE. The conviction stemmed from evidence that he forced a teenage girl to marry and have intercourse with her cousin. Jeffs was sentenced to a term of 10 years to life in prison, and he resigned from his position as head of the FLDS Church on the day he was sentenced. The FLDS Church remained in the head- lines in 2008, when police conducted a large- scale raid at a ranch owned by the church in Texas. Based on an apparent tip from a teenager living at the ranch, police entered the property and took custody of over 450 children living there. The children were placed in state custody. The girl calling authorities indicated that she was suffering abuse at the hands of an adult male, to whom she was spiritually married. The police said that they had taken the children upon the belief that they had been abused or were exposed to an immediate risk of abuse. The Texas Supreme Court ultimately ruled that the seizure was not justified and that the children should return to their parents. The controversy related to this raid continued well into 2009, with state officials defending their actions and FLDS Church supporters faulting them for acting pursuant to a telephone call that was later largely recognized to have been a hoax. The admissibility of evidence seized during the Texas raid is a subject of ongoing LITIGATION. The evidence is reported to includ e documents that list plural and underage marriages and pregnancies among sect girls. In the wake of the raid, twelve members of the FLDS Church were indicted on charges that include sexual ASSAULT of a child and bigamy. The decision on whether to admit the evidence recovered in the raid is crucial to each of the cases, as FLDS members have been reluctant to testify against the men. FURTHER READINGS Associated Press. “FLDS Men Want Seized Evidence Thrown Out.” USA Today May 13, 2009. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 30 POLYGAMY Altman, Irwin. 1996. “Polygamous Family Life: The Case of Contemporary Mormon Fundamentalists.” Utah Law Review (spring). Dane, Perry. 1996. “The Public, the Private, and the Sacred: Variations on a Theme of Nomos.” Cardozo Studies in Law and Literature 8 (spring-summer). Forbes, Stephanie. 2003. “Why Just Have One? An Evaluation of the Anti-polygamy Laws under the Establishment Clause.” Houston Law Review 39 (spring). Gordon, Sarah Barringer. 2001. The Mormon Question: Polygamy and Constitutional Conflict in Nineteenth- Century America. Chapel Hill, N.C.: Univ. of North Carolina Press. CROSS REFERENCES Aliens; Common Law; Marriage; Mor mon Church. POLYGRAPH An instrument used to measure physiological responses in humans when they are questioned in order to determine if their answers are truthful. Also known as a “lie detector,” the poly- graph has a controversial history in U.S. law. First developed in the late ninete enth century, its modern incarnation is an electromechanical device that is attached to a subject’s body during an interview. The discipline of polygraphy is based on the theory that by recording involun- tary physiological changes in the subject, the polygraph yields data that can be interpreted to determine whether the subject is telling the truth. Supporters of the scientific validity of the polygraph claim that results are approximately 90 percent accura te. For much of the twentieth century, however, polygraph evidence was in- admissible in criminal cases on grounds of unreliability. Polygraph evidence was admissible in civil cases, however, and it was also used widely in law enforcement, government, and industry. Polygraphy uses a variety of formats. Until the 1950s the format was the relevant/irrelevant (R/I) test; it rested on the now discredited belief that a subject produces a specific identifiable physiological response when lying. The R/I test has been replaced by the control question (CQ) format, the only format routinely used in forensic tests. Typically, a trained examiner fits a subject with sensors to measure respiration, heart rate and blood pressure, and perspiration, which the polygraph records using pens on graph paper. The examiner asks a series of questions, including control questions that are designed to provoke anxiety and denial. Later, another examiner compares these answers with answers pertaining to the matter at hand. This is known as numerical CQ testing. So-called global CQ testing includes a more subjective component: one examiner scores the test while also factoring in the subject’s observable physi- cal responses, such as movement, expression, and voice. In U.S. courts, the use of the polygraph was first addressed in 1923. In refusing to admit polygraph evidence in a murder case, the Court of Appeals for the District of Columbia created a legal standard that would last for nearly 70 years (Frye v. United States, 54 App. D.C. 46, 293 F. 1013 [1923]). This standard came to be known as the Frye rule, or general acceptance test. To be admissible in court, novel SCIENTIFIC EVIDENCE first must have gained general accep- tance in its scientific field. The Frye rule applied broadly to all scientific evidence, includin g polygraph evidence. Other appellate courts followed the court’s standard throughout most of the century, primarily because polygraphy never gained widespread acceptance among scientists. Nonetheless, poly- graph evidence was used in civil lawsuits, and police agencies, businesses, and government offices continued to use the polygraph regularly to provide evidence, screen job applicants, and investigate security risks. Advances in polygraphy helped spur a judicial reevaluation, but more important was the adoption of the FEDERAL RULES OF EVIDENCE in the 1970s. Rule 702 set an important new standard for the admission of scientific evidence: If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise. Over the next two decades, appellate courts authorized use of polygraph evidence in a few state courts, a trend followed by the U.S. Court of Appeals for the Eleventh Circuit and the military courts. Then, in 1993, in a case not specifically related to the polygraph, the U.S. Supreme Court held that Rule 702 replaced the Frye test (Daubert v. Merrell Dow Pharmaceu- ticals, Inc., 509 U.S. 579, 113 S. Ct. 2786, 125 L. Ed. 2d 469). In essence, the Court said that the standard of general scientific acceptance was not as important as whether EXPERT TESTIMONY GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION POLYGRAPH 31 can assist jurors. Soon thereafter, several federal courts reconsidered their long-standing ban on polygraph evidenc e and determined that they now had the discretion to permit its introduc- tion at trial. Congress also reexamined the use of the polygraph in industry. In 1988 lawmakers responded to civil liberty concerns about the abuse of polygraph testing in private industry by passing the Employee Polygraph Protection Act (29 U.S.C.A. §§ 2001 et seq.). The law bars pre- employment testing in banking, retail, and other private industries and also makes it illegal for employers to fire, discriminate against, or discipline employees who refuse to submit to polygraph tests. The act exempts government employers, private industry when an employee is under investigation for economic injury suffered by the employer, and all security services and industries that manufacture, dis- tribute, or dispense controlled substances. In military trials, the situation was different. In United States v. Scheffer, 523 U.S. 303, 118 S. Ct. 1261, 140 L. Ed. 2d 413 (1998), the Supreme Court addressed the claim of airman Edward G. Scheffer that prohibiting the intro- duction of polygraph evidence during his COURT- MARTIAL (military criminal trial) violated his constitutional rights. Under Military Rule of Evidence 707, polygraph evidence is not allowed in court-martial proceedings. So, although Scheffer, who was accused of, among other things, taking illegal drugs, passed a polygraph, it was inadmissible as evidence. A federal court of appeals reversed the court-martial, stating that excluding the polygraph evidence did, in fact, violate Scheffer’s right to present a defense as guaranteed by the SIXTH AMENDMENT. Upon review, the Supreme Court upheld Military Rule of Evidenc e 707. In the opinion of the Court, “State and federal governments unquestionably have a legitimate interest in ensuring that reliable evidence is presented to the trier of fact in a criminal trial.” However, “there is simply no consensus that polygraph evidence is reliable.” FURTHER READINGS Arendell, Robert L., and Stephen C. Peters. 1996. “Revisiting the Admissibility of Polygraph Evidence after Daubert.” Colorado Lawyer 25 (February). McCall, James R. 1996. “Misconceptions and Reevaluation— Polygraph Admissibility after Rock and Daubert.” Univ. of Illinois Law Review 2. Segrave, Kerry. 2003. Lie Detectors: A Social History. Jefferson, NC: McFarland. Sleek, Scott. 1998. “Psychologists Debate Merits of the Polygraph.” APA Monitor (June). Available online at http://www.apa.org/monitor/jun98/lie.html; website home page: http://www.apa.org (accessed August 17, 2009). PONZI SCHEME A fraudulent investment plan in which the investments of later investors are used to pay earlier investors, giving the appearance that the investments of the initial participants dramatically increase in value in a short amount of time. A Ponzi scheme is a type of investment FRAUD that promises investors exorbitant interest if they loan their money. As more investo rs parti- cipate, the money contributed by later investors is paid to the initial investors, purportedly as the promised interest on their loans. A Ponzi scheme works in its initial stages but inevitably collapses as more investors participate. A Ponzi scheme is a variation of illegal pyramid sales schemes. In a pyramid sales plan, a person pays a fee to become a distributor. Once the person becomes a distributor, he receives commissions not only for the products he sells but also for products sold by individuals he brings into the business. These new distribu- tors are beneath the person who brought them into the pyramid scheme, so they are “under the pyramid.” In illegal pyramid schemes, only the people at the top of the pyramid make substan- tial money because they get a commission from the products sold by everyone below them. As more people become distributors, the persons lower in the pyramid have less chance to make money. A Ponzi scheme was once was called a “bubble,” butitwasrenamedin1920after Ch arles Ponzi an d his Boston-based company had collected almost $10 million from 10,000 investors by selling promissory notes that claimed to pay 50 percent profit in 45 d ays. When the scheme was exposed, a Boston bank collapsed, and investors lost most of their money. Ponzi, an Italian immigrant, thought of profiting from the widely varying currency exchange rates for International Postal Reply Coupons (IPRCs), which were redeemed for stamps. IPRCs were intended to facilitate the sending of international mail. The sender put an IPRC, rather than a stamp, on a piece of mail going to another country, and the recipient GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 32 PONZI SCHEME exchanged the IPRC for the appropriate stamp in her country. Ponzi contended that he could pay a small amount for IPRCs in weak-currency countries and then redeem them at a substantial profit in the United States. He correctly noted that a stamp transaction might yield a 400 percent profit, but the amount of profit in real terms was very small. Nevertheless, he promoted his idea through his Boston-based Securities Ex- change Company. In March 1920 he began soliciting funds for purchasing the IPRCs with a promised 40 percent return in 90 days. Bank interest rates at the time were just five percent. Investors started loaning Ponzi their money, and within a short time he increased the promised return on 45-day notes to 50 percent. He also promised a 100 percent return on funds loaned to him for 90 days. He pledg ed to refund money on demand to any investor before the loan period was up. Money soon flooded Ponzi’s offices. By July 1920, he was taking in $1 million per week. Ponzi made an arrangement with the Han over TRUST COMPANY of Boston to deposit his funds. Hanover officials soon realized that Ponzi was not paying his initial investors with interest income but with the deposits of the new investors. Nevertheless, the bank eagerly sold Ponzi a large amount of its stock. On August 2, 1920, a Boston newspaper revealed the fraud and reported that Ponzi was hopelessly insolvent. Thousands of victims immediately demanded refunds. Ponzi paid as many as he could but exhausted his funds in a week. He then declared BANKRUPTCY.Inbank- ruptcy, the court ordered all of the persons who had been paid by Ponzi during the life of the scheme to return the proceeds to the bankruptcy trustee, who distributed the money on a PRO RATA basis to all of the other victims. Ponzi was eventually convicted of fraud in both state and federal court and imprisoned for several years. The Ponzi scheme did not end with Charles Ponzi. It has proved to be a reliable scam in which persons are lured into giving their money to con artists who promise enormous financial returns. The early cycle of a Ponzi scheme appears to confirm the reliability of the invest- ment, as some investors are paid the promised returns. The scheme is doomed to collapse when not enough new money exists to pay old obligations. Gullible individuals are not the only victims of Ponzi schemes. In the early 1990s, John G. Bennett, Jr. and his Foundation for New Era Philanthropy lured many U.S. universities and nonprofit groups into investing millions of dollars in the foundation. Bennett promised these organizations that they would double their money in six months with the help of anony- mous philanthropists. In May 1995 Prudential Securities, Inc., where most of the funds were deposited, discove red that New Era was under federal investigation and froze its accounts. The actio n triggered New Era’s bankruptcy. Bennett was later charged with 82 counts of fraud, MONEY LAUNDERING, and income TAX EVASION . As with the original Ponzi scheme, defrauded investors agreed to be reimbursed for up to 65 percent of their losses, with the money coming from groups that had deposited money with New Era early in the scheme and made a profit. In one of the biggest fraud cases in history, investors lost as much as $65 billion in a massive Ponzi scheme run by respected Wall A Ponzi scheme is a type of investment fraud that promises investors exorbitant interest returns on their loans. The scheme takes its name from Charles Ponzi, who in 1920 sold nearly $10 million in promissory notes before declaring bankruptcy and, ultimately, being sentenced for fraud. BETTMANN/CORBIS. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3 RD E DITION PONZI SCHEME 33 Street investor Bernard Madoff. The victims ranged from international banks to large charitable organizations to ordinary individuals who depended on those investments for in- come. Madoff pleaded guilty to several charges related to the scheme and was sentenced in 2009 to 150 years in prison. Madoff opened his firm , Bernard L. Madoff Investment Securities LLC., in 1960. He was a pioneer in the business known as market making. A market maker is a firm that buys and sells a particular stock at a publicly stated price. A market maker is an essential function of a market such as NASDAQ, which does not have an actual trading floor where buyers and sellers can trade face-to-face. A firm such as Madoff’s would act as a middle man between buyers and sellers of stock. Madoff was instrumental in the development of NASDAQ and served as its chairman. Some outside analysts began to question Madoff’s methods. In 2000 Massachusetts financial analyst named Harry Markopolos asked the SECURITIES AND EXCHANGE COMMISSION to investigate Madoff’s firm. The SEC largely ignored Markopolos’s claims despite his re- peated efforts. Others were also allegedly in- formed that Madoff was running a scheme. For instance, papers filed by New York University in a civil suit filed against J. Ezra Merkin of Gabriel Capital Group suggested that Merkin has been told several times in the 1990s that Madoff’s claimed returns were not possible. Merkin revealed in 2008 that he had lost $2.4 billion to Madoff in the Ponzi scheme. As the STOCK MARKET plunged in 2008, Madoff continued to claim that his funds were earning money. By November 2008, investors were beginning to panic and sought redemptions from Madoff. During November and December, Madoff allegedly mailed about $1 million worth of jewelry and other heirlooms to relatives and friends. His wife, Ruth, withdrew more than $15 million from a brokerage firm linked to him. A Ponzi Epidemic T hough Bernard Madoff captured the headlines in 2008 and 2009 for his massive Ponzi scheme, he was not the only person misleading investors with claims of high returns and low risk. The downturn in the U.S. economy that started in 2008 appeared to put pressure on a string of Ponzi scheme operators. They could not continue to attract enough new investors to fund the returns for their earlier investors. By 2009, the magnitude of Ponzi scheme FRAUD was staggering, as a number of multi-billion dollar funds crashed and burned, leaving investors with nothing. Many of the more trusting investors put all their money in these investment schemes, which compounded their misery. In late 2009 the Associated Press published a study that revealed Ponzi scams in all 50 states had resulted in the loss of more than $16.5 billion in 2009. Approximately 150 Ponzi schemes fell apart in 2009, compared to only 40 in 2008. Other statistics were illuminating as well: The FBI had 650 agents working on high-yield investment fraud cases in 2009, and the SECURITIES AND EXCHANGE COMMIS- SION (SEC) issued 82 percent more restraining orders against Ponzi schemes and securities fraud than in 2008. The Commodities Futures Trading Commis- sion (CFTC) even filed 31 civil actions in 2009 against Ponzi schemes. But for the 2008 recession, many law enforcement officials believe the schemes would largely have remained undetected. In December 2009 Tom Petters was convicted on 20 counts of fraud by a Minnesota federal court jury. Petters built an empire that included the Polaroid camera company and Sun Country Airlines by using a $3.65 billion Ponzi scheme. He tricked investors using Petters Company as a front; investors thought he was using their money to bu y con sumer electronics for resale to retailers such as Costco. The investors included hedge funds, money managers, and grass-roots investorssuchaschurchgroups.The government proved that Petters never bought the goods (usually electronics) but used the m oney to buy other companies and support an extravagant l ifestyle. He was well known i n Minnesota for his philan- thropy, g iving a number of colleges large sums for buildings. Since his conviction the colleges have either taken the Petters name off the building or returned the money. The saga of Allen Stanford’sPonzi scheme drew worldwide attention in 2009. Stanford’s companies included Antiguan- based Stanford International Bank (SIB), Houston-based broker-dealer and invest- ment adviser Stanford Group Company (SGC), and investment adviser Stanford GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 34 PONZI SCHEME The scheme finally came to an end when Madoff, on December 10, 2008, attempted to give his two sons a bonus. Both sons worked for their father, but neither worked with his asset management business. Madoff’s sons questioned him about how he could pay them their bonus when he was unable to pay his investors. At that point, Madoff admitted to his sons that his firm had been running a giant Ponzi scheme. One day later, his sons alerted authorities about Madoff’s business. Agents with the FEDERAL BUREAU OF INVESTIGATION visited Madoff and asked whether there was an “innocent explanation” for what Madoff had told his sons. Madoff responded, “There is no innocent explanation.” He told agents that he “paid investors with money that wasn’tthere” andexpectedtogotoprison. The New York Times called the scheme the first worldwide Ponzi scheme. Madoff attracted investors from Europe, Asia, and Middle East. Several prominent Jewish executives and orga- nizations were Madoff’s clients, including Yeshiva University and charities set up by the likes of director Steven Spielberg. Other inves- tors included Hall of Fame pitcher Sandy Koufax as well as actors John Malkovich, Kyra Sedgwick, and Kevin Bacon. Mado ff admitted to prosecutors that he lost more than $50 billion to investors, though by some estimates, the amount reached closer to $65 billion. FURTHER READINGS Dunn, Donald H. 1975. Ponzi!: The Boston Swindler. New York: McGraw-Hill. Gandel, Stephen. 2008. “Wall Street’s Latest Downfall: Madoff Charged with Fraud.” Time (Dec. 12). Henriques, Diana B. 2008. “Madoff Scheme Kept Rippling Outward.” New York Times (Dec. 19). “Treatment of Investors in Ponzi Scheme.” 2003. Tax Management Memorandum (April 21). Weisman, Stewart L. 1999. Need and Greed: The Story of the Largest Ponzi Scheme in American History. Syracuse, N.Y.: Syracuse Univ. Press. CROSS REFERENCES Criminal Law; White Collar Crime. Capital Management. In February 2009, the SEC filed a complaint in federal court in Dallas, alleging that acting through a network of SGC financial advisers, SIB had sold approximately $8 billion of so-called certificates of deposit (CDs) to investors by promising improbable and unsubstanti- ated high interest rates. These rates were supposedly earned through the SIB unique investment strategy, which purportedly allowed the bank to achieve double-digit returns on its investments for the past 15 years. Stanford and his associates repre- sented to CD purchasers that their deposits were safe, claimed that the bank reinvested client funds primarily in liquid financial instruments (the portfolio). Stanford also claimed that the portfolio was monitored by a team of over 20 analysts, and it was subject to yearly audits by Antiguan regulators. After the Madoff funds collapsed, SIB tried to reassure its own investors by claiming the bank had no “direct or indirect” exposure to the Madoff scheme. The SEC alleged that none of these claims was true. By the time the fraud was revealed, Stanford had recruited 31,000 investors. AHouston GRAND JURY indicted Stanford in June 2009 on 21 counts of fraud. He was immediate ly jailed. The criminal INDICTMENT alleged that Stan- ford and other executives at his firm falsely claimed to have grown $1.2 billion in assets in 2001 to roughly $8.5 billion by the end of 2008. Even as Stanford announced healthy returns for his investors, the indictment alleged that he was secretly diverting more than $1.6 billion in personal loans to himself. Stanford, unlike Madoff, protested his innocence and denied he ran a Ponzi scheme. As of early 2010 he awaited trial. Another large Ponzi scheme in- volved a religious broadcaster. In late 2009, the SEC and the CF TC filed separate complaints against Minnesota residents Trevor Cook, a self-proclaimed money manag er, and Patrick Kiley, a radio personality. On his radio show, Follow the Money,whichwasbroadcast in more than 200 markets and on Christian shortwave radio, Kiley touted the pair’s investment plan. They prom- ised returns o f 10 to 12 percent on investments that were supposedly based on trading foreign currencies. At the timethecomplaintswerefiled,1,000 investors were allegedly duped out o f about $19 0 billion. As with so many Ponzi schemers, Cook bought a fancy, historic mansion in Minneapolis and gambled away $2.8 million. Inv estigators estimated the pair helped themselv es to over $40 million dollars an d lo st a nother $40 million in high-risk currency trad- ing. Many of the victims were SENIOR CITIZENS who were “unsophisticated and inexperienced in financial matters,” the SEC stated in its lawsuit. “Some victims liquidated their retirement accounts to invest in Cook’sandKiley’sventure.” The lure of high returns at minimal risk is enticing for sophisticated and unsophisticated investors alike. As Mad- off, Petters, and Stanford illustrate, even money managers and HEDGE FUND man- agers can be convinced to jettison their common sense. Though this wave of Ponzi schemes was expected to play themselves out over the subsequent few years, there was little doubt that other individuals would discover the Ponzi scheme and begin the inevitable rise and fall. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION PONZI SCHEME 35 POPULAR NAME TABLES Reference charts that aid in locating statutes, if the names by which they are commonly referred to are known. For example, one can discover the official name and location of the SHERMAN ANTI-TRUST ACT (15 U.S.C.A. § 1 et seq.) from a popular name table. PORNOGRAPHY The representation in books, magazines, photo- graphs, films, and other media of scenes of sexual behavior that are erotic or lewd and are designed to arouse sexual interest. Pornography is the depiction of sexual behavior that is intended to arouse sexual excitement in its audience. During the twentieth century, Americans debated whether porno- graphic material should be legally protected or banned. Those who believe pornography must be protected argue that the FIRST AMENDMENT to the U.S. Constitution guarantees freedom of expres- sion, including sexual expression. Traditional opponents of pornography raise moral concerns, arguing that the First Amendment does not protect expression that corrupts people’sbehav- ior. Toward the end of the century, some feminists advocated suppressing pornography because it perpetuates gender stereotypes and promotes violence against women. Pornography has been regulated by the legal standards that govern the concept of OBSCENITY, which refers to things society may consider disgusting, foul, or immoral, and may include material that is blasphemous. Pornography is limited to depictions of sexual behavior and may not be obscene. The U.S. SUPREME COURT has established that obscenity is not protected by the First Amend- ment. The more troublesome question has been defining what is and is not obscene. In 1957 the U.S. Supreme Court, in Roth v. United States, 354 U.S. 476, 77 S. Ct. 1304, 1 L. Ed. 2d 1498, stated that obscenity is “utterly without redeeming social importance” and therefore is not protected by the First Amendment. The Roth test for obscenity is “whether to the average person, applying contem- porary community standards, the dominant theme of the material taken as a whole appeals to a prurient [lewd or lustful] interest.” The Roth test proved difficult to use because every term in it eluded a conclusive definition. The Supreme Court added requirements to the definition of obscenity in a 1966 case involving the English novel Memoirs of a Woman of Pleasure, more commonly known as Fanny Hill. In A Book Named “John Cleland’s Memoirs of a Woman of Pleasure” v. Attorney General, 383 U.S. 413, 86 S. Ct. 975, 16 L. Ed. 2d 1, the Court concluded that to establish obscenity, the material must, aside from appeal- ing to the prurient interest, be “utterly without redeeming social value” and “patently offensive because it affronts contemporary community standards relating to the description of sexual matters.” The phrase “utterly without redeeming social value” allowed a loophole for pornogra- phers. Expert witnesses testified that there was at least a shred of social value in the novel’s depiction of sexual behavior and social relations. The Supreme Court established the basic legal standard for pornography in Miller v. California, 413 U.S. 15, 93 S. Ct. 2607, 37 L. Ed. 2d 419 (1973). Chief Justice WARREN E. BURGER stated in Miller that pornographic material would be classified as obscene if it met three criteria: (1) the work, taken as a whole by an average person a pplying contemporary community standards, appeals to the prurient interest; (2) the work depicts sexual conduct in a patently off ensive way; a nd (3) the work, when taken as a whole, lacks serious literary, artistic, political, or scientific value. Burger emphasized in Miller that only hard- core pornography could be designated as patently offensive. He listed examples of patently offensive descriptions or representations, including repre- sentations of “ultimate sex acts” and “masturba- tion, excretory functions, and lewd exhibition of the genitals.” Based on Miller, the law distinguishes between hard-core pornography and soft-core porno- graphy, which involves depictions of nudity and limited and simulated sexual conduct. Because it is not as graphic or explicit as hard- core pornography, soft-core pornography is protected under the First Amendment. CHILD PORNOGRAPHY, whether hard-core or soft-core, is treated severely under the law. In 1982 the Supreme Court, in New York v. Ferber, 458 U.S. 747, 102 S. Ct. 3348, 73 L. Ed. 2d 1113, held that child pornography is not a form of expression protected under the Constitution. It found that the state of New York had a compelling interest in protecting children from SEXUAL ABUSE and found a close connection GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 36 POPULAR NAME TABLES Section of Popular Name Table Revenue Act of 1942 Oct. 21, 1942, ch. 619, 56 Stat. 798 Revenue Act of 1943 Feb. 25, 1944, ch. 63, 58 Stat. 21 Revenue Act of 1945 Nov. 8, 1945, ch. 453, 59 Stat. 556 Revenue Act of 1948 Apr. 2, 1948, ch. 168, 62 Stat. 110 Revenue Act of 1950 Sept. 23, 1950, ch. 994, 64 Stat. 906 Revenue Act of 1951 Oct. 20, 1951, ch. 521, 65 Stat. 452 Revenue Act of 1962 Pub. L. 87–834, Oct. 16, 1962, 76 Stat. 960 Short title, see 26 U.S.C. 1 note Revenue Act of 1964 Pub. L. 88–272, Feb. 26, 1964, 78 Stat. 19 Short title, see 26 U.S.C. 1 note Revenue Act of 1971 Pub. L. 92–178, Dec. 10, 1971, 85 Stat. 497 Short title, see 26 U.S.C. 1 note Revenue Act of 1978 Publ. L. 95–600, Nov. 6, 1978, 92 Stat. 2763 Short title, see 26 U.S.C. 1 note Revenue Act of 1987 Pub. L. 100–203, title X, Dec. 22, 1987, 101 Stat. 1330–382 Short title, see 26 U.S.C. 1 note Revenue Adjustment Act of 1975 Pub. L. 94–164, Dec. 23, 1975, 89 Stat. 970 Short title, see 26 U.S.C. 1 note Revenue Adjustments Act of 1980 Pub. L. 96–499, title XI, Dec. 5, 1980, 94 Stat. 2660 Revenue and Expenditure Control Act of 1968 Pub. L. 90–364, June 28, 1968, 82 Stat. 251 Short title, see 26 U.S.C. 1 note Revenue Forgone Reform Act Pub. L. 103–123, title VII, Oct. 28, 1993, 107 Stat. 1267 Short title, see 39 U.S.C. 101 note Revenue Reconciliation Act of 1989 Pub. L. 101–239, title VII, Dec. 19, 1989, 103 Stat. 2301 Short title, see 26 U.S.C. 1 note Revenue Reconciliation Act of 1990 Pub. L. 101–508, title XI, Nov. 5, 1990, 104 Stat. 1388–400 Short title, see 26 U.S.C. 1 note Revenue Reconciliation Act of 1993 Pub. L. 103–66, title XIII, ch. 1 (§13001 et seq.), Aug. 10, 1993, 107 Stat. 416 Short title, see 26 U.S.C. 1 note Revised Continuing Appropriations Resolution, 2007 Pub. L. 110–5, Feb. 15, 2007, 121 Stat. 8 Revised Organic Act of the Virgin Islands July 22, 1954, ch. 558, 68 Stat. 497 (48 U.S.C. 1541 et seq.) Short title, see 38 U.S.C. 1541 note Revolutionary War and War of 1812 Historic Preservation Study Act of 1996 Pub. L. 104–333, div. I, title VI, §603, Nov. 12, 1996, 110 Stat. 4172 (16 U.S.C. 1a–5 note) Reynolds Aviation Training Act See Army Aviation Cadet Act Rhinoceros and Tiger Conservation Act of 1994 Pub. L. 103–391, Oct. 22, 1994, 108 Stat. 4094 (16 U.S.C. 5301 et seq.) Short title, see 16 U.S.C. 5301 note Rhinoceros and Tiger Conservation Act of 1998 Pub. L. 105–312, title IV, Oct. 30, 1998, 112 Stat. 2959. Short title, see 16 U.S.C. 5301 note Rhinoceros and Tiger Conservation Reauthorization Act of 2001 Pub. L. 107–112, Jan. 8, 2002, 115 Stat. 2097 Short title, see 16 U.S.C. 5301 note Rhode Island Indian Claims Settlement Act Pub. L. 95–395, Sept. 30, 1978, 92 Stat. 813 (25 U.S.C. 1701 et seq.) Short title, see 25 U.S.C. 1701 note Rice Production Act of 1975 Pub. L. 94–214, Feb. 16, 1976, 90 Stat. 181 Short title, see 7 U.S.C. 428c note Richard B. Russell National School Lunch Act June 4, 1946, ch. 281, 60 Stat. 230 (42 U.S.C. 1751 et seq.) Short title, see 42 U.S.C. 1751 note Richmond National Battlefield Park Act of 2000 Pub. L. 106–511, title V. Nov. 13, 2000, 114 Stat. 2373 (16 U.S.C. 423l –1 et seq.) Ricky Ray Hemophilia Relief Fund Act of 1998 Pub. L. 105–369, Nov. 12, 1998, 112 Stat. 3368 (42 U.S.C. 300c–22 note) RICO See Racketeer Influenced and Corrupt Organizations Act (RICO) Riegle Community Development and Regulatory Improvement Act of 1994 Pub. L. 103–325, Sept. 23, 1994, 108 Stat. 2160 Short title, see 12 U.S.C. 4701 note Riegle-Neal Amendments Act of 1997 Pub. L. 105–24, July 3, 1997, 111 Stat. 238 Short title, see 12 U.S.C. 1811 note Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 Pub. L. 103–328, Sept. 29, 1994, 108 Stat. 2338 Short title, see 12 U.S.C. 1811 note Right of Way Act of 1891 Mar. 3, 1891, ch. 561, §18, 26 Stat. 1101 Right to Financial Privacy Act of 1978 Pub. L. 95–630, title XI, Nov. 10, 1978, 92 Stat. 3697 (12 U.S.C. 3401 et seq.) Short title, see 12 U.S.C. 3401 note A sample section from a popular name table. ILLUSTRATION BY GGS CREATIVE RESOURCES. REPRODUCED BY PERMISSION OF GALE, A PART OF CENGAGE LEARNING. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3 RD E DITION POPULAR NAME TABLES 37 . connection GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 36 POPULAR NAME TABLES Section of Popular Name Table Revenue Act of 1942 Oct. 21, 1942, ch. 619, 56 Stat. 7 98 Revenue Act of 1943 Feb U.S.C. 181 1 note Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 Pub. L. 103–3 28, Sept. 29, 1994, 1 08 Stat. 23 38 Short title, see 12 U.S.C. 181 1 note Right of Way Act of 189 1 . Today May 13, 2009. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 30 POLYGAMY Altman, Irwin. 1996. “Polygamous Family Life: The Case of Contemporary Mormon Fundamentalists.” Utah Law Review (spring). Dane,