Wednesday, January 11, 2006
The Federal Trade Commission has set up a website, OnGuardOnline (here), to help consumers in dealing with the various types of cybercrime we all run into every day. Hardly a day goes by that I don't receive a notice from "PayPal" or some bank that my account information needs to be updated, or an urgent message asking help in transferring a large amount of money from a bank in Sierra Leone, the Ivory Coast, or the like. The FTC site has information about identity theft, phishing, spam fraud, and spyware. In addition to links to other federal agencies, such as the Department of Homeland Security and the SEC, there is also a page that gives information and links for filing complaints with the appropriate agency. (ph)
Monday, November 14, 2005
If someone were to tell you that white collar crime prosecutions are down, your response might be the same as mine -- which was -- NO WAY! According to Trac Reports here in discussing white collar prosecutions it stated that DOJ:
"documented a decline of about ten percent from FY 2003 to FY 2004. Estimates for 2005 indicate that the decline is continuing."
The problem is not the Trac Reporting System, a wonderful resource of Syracuse University (blog author notes that she received a BS from this institution), but rather how DOJ is categorizing white collar crime. It seems that white collar crime includes antitrust and fraud, but fails to include corruption as well as a host of other criminal activity that clearly is white collar in nature.
So what isn't considered white collar crime by the DOJ - see here - the list includes environmental offenses, bribery, federal corruption, procurement corruption, state and local corruption, immigration violations, money laundering (how many white collar cases tack on money laundering :) ), OSHA violations, and copyright violations. Oddly enough, every white collar crime casebook seems to include at least some of these categories. And if you go to a typical website of a United States Attorney, many of these items are considered white collar crime. For example, the United States Attorney's Office for the Northern District of California describes its efforts against white collar crime here as follows:
"The White Collar Crime Section is responsible for prosecuting a wide range of complex cases, including public corruption (such as bribery, kickback schemes, and theft of government funds) health care fraud, financial institutions fraud, bankruptcy fraud and mail and wire fraud. Civil rights cases are also monitored, evaluated and prosecuted by the section. Environmental cases are prosecuted under the Clean Water Act, Clean Air Act and other federal environmental statutes. The section also prosecutes cases involving the protection of wildlife and Food and Drug Administration cases concerning the safety of the nation's food supply."
Maybe white collar prosecutions really are down, but it might be more palatable if the statistics were a bit clearer. So why would DOJ "cook the books" to show a decrease in white collar crime prosecutions? I can think of no possible reason. Could this be a situation of the cook not knowing what is in the books?
Thursday, September 8, 2005
The final report of the Independing Inquiry Committee Into the United Nations Oil-for-Food Programme has been released, and it is a catalogue of how a well-intentioned relief effort spun out of control through a lack of oversight and the inability of the UN, particularly the Security Council, to maintain any sort of responsible discipline over the operation. The Report (available here) points out that among the lessons to be learned from the effort was leaving far too much initiative for the program's design and implementation with the Iraqi regime -- which is a bit like leaving the punishment to the offender that led, to no one's great surprise, to systematic abuses. The Committee also emphasized the "grievous absence of effective auditing and management controls" for the program. Among the lessons of Enron et al. is that corruption and a lack of internal controls is a recipe for disaster. (ph)
Tuesday, August 9, 2005
The Independent Inquiry Commission Into the United Nations Oil-for-Food Programme issued its third interim report (here) and identified two senior officials in the Programme who it concluded engaged in criminal wrongdoing. The report analyzes the role of Benon Sevan, the Executive Director of the UN Office of the Iraq Programme, and Alexander Yakovlev, a UN procurement office, and concludes that they solicited bribes. The Commission further recommends that the UN waive the immunity that protects each from prosecution. A statement (here) by the UN chief of staff announced that Secretary-General Annan intends to waive the immunity, and that "[w]ith specific regard to Mr. Sevan, the United Nations is already cooperating with inquiries from the Manhattan District Attorney and is in the process of replying to a request for cooperation from the U.S. Attorney for the Southern District of New York. With regard to Mr. Yakovlev, the UN's Office for Internal Oversight Services (OIOS) last month contacted the U.S. Attorney for the Southern District of New York to alert them that internal, ongoing investigations of Mr.Yakovlev had turned up prima facie evidence of criminal wrong doing and has shared that evidence with the U.S. Attorney's office." With the immunity from prosecution gone, look for prosecutors to file charges in the near future against each for his role in a program that was rife with corruption. (ph)
Saturday, July 9, 2005
For those interested in how the Department of Justice's policy on charging business organizations, known as the Thompson Memo, affects the way in which corporations now have to conduct their business, be sure to check out a series of posts by Paul McGreal on the Corporate Compliance Prof blog for an excellent summary of the issues (posts here in Compliance 101). (ph)
Thursday, June 30, 2005
Wednesday, June 8, 2005
The Department of Defense's Inspector General issued a very extensive report on the acquisition program involving the leasing of 100 tankers from Boeing (at a total cost of over $23 billion) that involved what it termed an "inappropriate acquisition strategy." Problems of favoritism shown to Boeing by Darleen Druyan, former Principal Deputy Assistant Secretary of the Air Force for Acquisition and Management, and her improper negotiations to obtain a job at the company, resulted in her pleading guilty to a conflict-of-interest charge and sentenced to a nine-month prison term; in addition, former Boeing CFO Michael Sears also entered a guilty plea related to the botched hiring of Druyan. The IG report (available to download here -- like all things military, it is very long) notes that in the future, DoD "must not tolerate situations where senior officials use their positions to have contractors put pressure on other senior officialsto have them change their stance relative to a particular situation." (ph)
Tuesday, May 24, 2005
Who among us really misses the independent counsel statute? An earlier post (here) discussed a D.C. Circuit case involving a former lower-level administrator at the White House who got caught up in the travel office investigation, a minor sideshow in the Whitewater investigation, and sought attorneys fees under the statute. At least that investigation has ended, but it seems that the IC investigation of former HUD Secretary Henry Cisneros remains alive, and with continuing support from Congress it may keep going, and going . . . According to an AP story (here), a move to terminate funding for the investigation was killed in a closed-door Senate negotiation, which allows Independent Counsel David Barrett to remain on an investigation in which the initial target (Cisneros) entered a guilty plea to a misdemeanor in 1999 (he paid a $10,000 fine) and was pardoned in 2001, arising from lying to the FBI about payments made to a mistress. Barrett estimates that it will take at least another ten months, and possibly longer, to complete the investigation and issue a report. How has it taken so long, you might ask? Well, the Wall Street Journal had reported back in 2000 that Barrett expanded his investigation to cover possible obstruction by the IRS and DOJ of the Cisneros investigation at the instigation of the Clinton White House, but not much has been heard recently (see National Review article here).
Barrett was appointed on May 24, 1995, so this is his tenth birthday, which I suspect is the record for the longest continuous service as an Independent Counsel -- he's been on the job longer than my youngest daughter has been around. While being the Cal Ripken of the IC crowd is something to be proud of, one wonders how much longer the investigation will remain open, especially after the government's expenditures on it have exceeded $21 million and not much seems to have come out over the past couple years. Nevertheless, Robert Novak had an article earlier this month (here) proclaiming that Barrett's report contains blockbuster information about IRS efforts to obstruct the Cisneros investigation, something likely to draw a yawn from most. (ph)
Monday, May 23, 2005
A story in the North County Times (San Diego) discusses the NASD's funding of a study to analyze why the elderly are the targets of investment scams. George Chamberlin sums it up (here): "I could have saved these guys a lot of money. The reason the elderly are targeted for investment scams is the same reason that Willie Sutton said he robbed banks: That's where the money is." I'm always leery of criticizing studies based just on the title, and there is certainly value in determining whether there are particular schemes or pitches that work well on the elderly. That said, scam artists focus on the elderly because of particular vulnerabilities of many of them, such as isolation and a lack of access to unbiased financial (and legal) advice; pressures from living on a fixed income in the face of increasing costs (especially medical and prescription costs), a lack of investing experience, and susceptibility to high-pressure sales tactics. These traits are not exclusive to the elderly, and many scams also target immigrants and religious groups (the latter particularly fall prey to appeals based on trust of a fellow church member). The elderly are like banks because they do have assets, and as the baby boomers age, the schemes targeting those near retirement age and the newly-retired will only increase. Let's hope the NASD is investing its research dollars well. (ph)
Tuesday, May 17, 2005
The so-called Detroit Terrorism trial, which ended with the government admitting that its theory of prosecution was unsupported by the evidence, resulted in an apology by outgoing Deputy Attorney General James Comey recently. An AP story (here) quotes Comey as stating, "I think that the people we represent -- the people of the United States -- were owed an apology for the way the work was done in that particular matter." While the government dismissed the terror-related charges against the two defendants convicted of those offenses in the earlier trial, it did subsequently indict both men on fraud charges related to an attempted insurance fraud involving a claim for $15,000 from a fake auto accident -- a claim that was never paid. An AP story (here) reveals internal DOJ e-mails around the time of the trial regarding the fraud charge, expressing concern that bringing such a charge might be perceived as "vindictive" if brought after the defendants were acquitted or a mistrial declared. The e-mails give a rare inside look at assessment of the charges by the prosecutors. One defendant entered a guilty plea to the fraud charge, a second one awaits trial.
An additional aspect of the case that remains active is the investigation of Richard Convertino, one of the prosecutors, and others for conduct related to the investigation and trial. Convertino resigned on Monday from the Department of Justice, which will likely end the investigation by the Office of Professional Responsibility (see AP story here). (ph)
Monday, May 16, 2005
A New York Times story (here) discusses a report that will be issued this week by the Government Accountability Office (GAO) reviewing the FBI's spending of funds appropriated by Congress for health care fraud investigations. According to the Times' discussion of the report, a portion of an annual appropriation of $114 million from the Medicare trust fund that is earmarked specifically for health care investigations may have been shifted over to counterterrorism projects. While the money was not misappropriated, it raises questions about the Bureau's accountability for the use of resources targeted to a specific area of investigation and prosecution. Given the sizable spending on Medicare and Medicaid ($474 billion), and persistent patterns of abuse in the field, health care fraud remains an area of considerable importance for federal law enforcement. (ph)
Monday, February 21, 2005
The U.S. Attorney's Office for the Eastern District of Virginia issued a white paper on Feb. 18, "Combating Procurement Fraud: An Initiative to Increase Prevention and Prosecution of Fraud in the Federal Procurement Process." The district is home to the Pentagon and, more importantly, thousands of government defense consulting firms in Crystal City, Rosslyn, and Alexandria; the revolving door spins rather quickly in D.C. The recent scandal involving Boeing (see previous post here) that led to the sentencing of the company's former CFO and a senior Air Force procurement officer has led to a large-scale initiative by the U.S. Attorney's Office, which is already well-known for the Ill-Wind investigation of the 1980s. The white paper discusses the reasons for the formation of a new Procurement Fraud Working Group:
In addition to increasing DoD contracts, these contractors are expanding operations to acquire and service contracts from the State Department, DHS, and other federal agencies. For example, the President and Chief Operating Officer of one of DHS's top ten contractors recently announced the company’s intent to grow 15 per cent each year. With increased procurement, including a rise in the outsourcing of particular services, there is also the potential for an increase in procurement fraud, which includes product substitution, defective pricing or other irregularities in the pricing and formation of contracts, misuse of classified or other sensitive information, labor mischarging, accounting fraud, fraud involving foreign military sales and ethical and conflict of interest violations. This puts the United States Attorney's Office, as chief law enforcement agency for this district, in a unique position to act.