Friday, March 14, 2008

Deferred Prosecution Agreements & Spitzer

The FCPA Blog appropriately notes we haven't being seeing many deferred prosecution agreements these days (see here).  As the FCPA Blog points out, there have been no reported agreements since Flowserve on February 21.(see here).  It is probably a wise move for the government to lay low on deferred prosecution agreements right now with the microscope focused on how monitors are being appointed on the agreements, and also looking at issues of who should have oversight - prosecutors or the courts.

And then to hear discussion of the possibility of former NY Governor Spitzer obtaining a deferred prosecution agreement sends an interesting message.  One finds this mention noticeably in an article in the Wall Street Journal by Laurie P. Cohen, Glen R. Simpson and Amir Efrati. (see here). In the corporate setting, it is rare that we see an individual obtaining a deferred prosecution agreement.  The last ones of major significance were Former Monster Worldwide CEO Andrew McKelvey (see here) and Frank Quattrone (see here). Now if they decide upon a deferred prosecution agreement with Spitzer, what kind of terms will they include, and will it include a clause used in the Quattrone agreement requiring that he "can only associate with law-abiding persons." 


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The most surprising element of the coverage of Eliot Spitzer is that the media and most legal blogs are ignoring the significance of his long term relationship with organized crime. Remember, this is not a case of Eliot finding a hooker on Craigslist or at a Hamptons Club. The undeniably intelligent and experienced Spitzer chose the specific prostitution ring for reasons unknown to us. But lets consider his parallel role as U.S. Attorney and NY Attorney General: Each time Spitzer used his powerful authority of discretion to decide for, or against, an investigation or prosecution we are now forced to wonder "why?". Might the alleged criminals and their crimes which Spitzer decided against pursuing have been related somehow to the prostitution ring? Did they have dirt on Spitzer? Clearly, Spitzer had numerous high profile prosecutions - but were these prosecutions done to attack competitors of his crime family, or to avert attention from those instances when he ignored reported crimes? One example are claims that Eliot Spitzer ignored a recorded death threat against a whistle blower who exposed conflict of interest and hedge fund favoritism in the Worldcom bankruptcy. Perhaps a good place for the special prosecutor to start would be this largest fraud in U.S. history: Worldcom and the claims trading by private hedge funds.

Posted by: David O'Donnell | Mar 20, 2008 11:39:14 PM

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