Sunday, April 15, 2012
Many companies, as part of their compensation and benefits packages, have indemnification agreements that allow for payment of attorney fee expenses to company officers, directors, and others. Some may be surprised to learn that Fannie Mae and Freddie Mac have such agreements as part of Enterprise Bylaws or individual agreements. "Between 2004 and October 31, 2011, Fannie Mae advanced $99.4 million in legal expenses to cover the representation of" three former officers "in connection with government investigations and lawsuits stemming from accounting irregularities uncovered in 2004." The Office of Inspector General issued a report that offers some suggestions on reducing future costs. The "evaluation was led by Director of Special Projects David Z. Seide, and Investigative Counsel Stephen P. Learned contributed to its completion." The report can be found here.
Wednesday, February 8, 2012
One of the supposed hallmarks of the American criminal justice system is the prudent exercise of prosecutorial discretion. But prosecutorial discretion, even when it works, is a blessing and a curse. A blessing, because it allows for the flexibility and compromise without which most systems, even well-constructed ones, cannot function. A curse, because liberty should not depend upon the the character and wisdom of the person temporarily wielding power.
The U.S. Attorney's Office for the Central District of California has decided not to prosecute Lance Armstrong. An announcement to that effect was made last Friday. The L.A. Times story is here. A good Washington Post piece is here. Today's Wall Street Journal discusses the declination and a potential future probe of of improper leaks related to the case. (An internal investigation of some kind appears to be warranted given the massive leaking that has occurred.) According to the WSJ, the declination decision by U.S. Attorney Andre Birotte and his top aides went against the recommendation of the two line AUSAs handling the case. Maybe, but take it with a grain of salt. News stories about the internal machinations of prosecution teams often get it wrong.
Based on what I know about the case, the decision to decline appears to have been a no-brainer. Recent federal prosecutions involving alleged drug use by star athletes have expended enormous sums of money with mixed or poor results. In the Armstrong matter, the doping, if it occurred, was not itself a federal crime. Prosecutors would have been peddling a wire fraud theory under which Armstrong allegedly defrauded team sponsors by intentionally violating a contractual obligation to avoid improper drug use. Not very sexy. Twelve typical American jurors might well wonder at the start of such a case, "Why are we even here?" Finally, Armstrong is enormously popular and has a sterling defense team with unlimited resources.
The U.S. Anti-Doping Agency (USADA) vows to continue its investigation, accurately noting that its "job is to protect clean sport rather than enforce specific criminal laws." But USADA wants the grand jury materials. This would be a travesty, and is unlikely to happen. Federal grand jury materials are presumptively secret by law for good reason. Don't count on a federal court sanctioning transfer of grand jury materials to an agency like USADA.
In other declination news, the DOJ attorneys prosecuting the Gabon sting case have informed U.S. District Judge Richard Leon that DOJ is considering dropping all future prosecutions. A decision will be made by February 21. The BLT piece is here. Full disclosure: I briefly represented one of the defendants, and considered representing another of the defendants, neither of whom has gone to trial. My comments here are based on the public record. The two cases brought to date have resulted in three acquittals and two hung juries. Nobody going to trial has been convicted in what DOJ thought was a sure win. Whatever merit there was in initially bringing the case, reconsideration is in order. The two trials to date have revealed a number of weaknesses. First, this was a sting--a crime engineered by the U.S. Government. Second, the informant who helped orchestrate it was far more compromised than the typical informant in a white collar case. Third, in a key tape recorded conversation between that informant and one of the defendants, the defendant seeks to back out of the alleged unlawful transaction, but the informant reels the defendant back in by telling him that attorneys have approved the deal. Fourth, the inherent ambiguities and weaknesses in the FCPA itself.
If there has been a benefit to the Gabon FCPA prosecution it is this--it has taught the white collar defense bar that FCPA cases can be fought and won and, presumably, has taught DOJ that FCPA cases aren't as easy to win as they first appear.
February 8, 2012 in Celebrities, Corruption, Current Affairs, FCPA, Fraud, Government Reports, Grand Jury, Investigations, Media, Prosecutions, Prosecutors, Sports, Statutes | Permalink | Comments (0) | TrackBack (0)
Wednesday, November 23, 2011
My colleague Ellen Podgor recently commented here on Judge Emmet Sullivan's 11-21-11 ORDER in In Re SPECIAL PROCEEDINGS, the ancillary proceedings initiated by Judge Sullivan to investigate the multiple Brady violations committed by DOJ prosecutors in U.S. v. Theodore Stevens. The ensuing investigation was conducted, on Judge Sullivan's behalf, by veteran DC lawyers Hank Schuelke and William Shields, who have now issued a report that is, I hope, only temporarily under seal.
It is obvious from reading his Order that Judge Sullivan is still outraged. That's a good thing. Until enough federal judges get hopping mad about systemic DOJ Brady violations, we will have no real legislative discovery reform at the federal level.
In addition to the points highlighted by Professor Podgor, Judge Sullivan's Order notes the following findings and conclusions by Schuelke and Shields:
1. "[T]he investigation and prosecution of Stevens were 'permeated by the systematic concealment of significant exculpatory evidence which would have independently corroborated his defense and his testimony, and seriously damaged the testimony and credibility of the government's key witness.'"
2. "[A]t least some of the concealment was willful and intentional, and related to many of the issues raised by the defense during the course of the Stevens trial."
3. Schuelke and Shields "found evidence of concealment and serious misconduct that was previously unknown and almost certainly would never have been revealed--at least to the Court and to the public--but for their exhaustive investigation."
4. Schuelke does not recommend criminal contempt proceedings, because "in order to prove criminal contempt beyond a reasonable doubt under 18 U.S.C. [Section] 401 (3), the contemnor must disobey an order that is sufficiently 'clear and unequivocal at the time it is issued'... [but] no such Order existed in this case. Rather, the Court accepted the repeated representations of the subject prosecutors that they were familiar with their discovery obligations, were complying with those obligations, and were proceeding in good faith."
5. "Mr. Schuelke also notes that '[i]t should go without saying that neither Judge Sullivan, nor any District Judge, should have to order the Government to comply with its constitutional obligations, let alone that he should feel compelled to craft such an order with a view toward a criminal contempt prosecution, anticipating its willful violation.'"
6. "Mr. Schuelke 'offers no opinion as to whether a prosecution for Obstruction of Justice under 18 U.S.C. [Section] 1503 might lie against one or more of the subject attorneys and might meet the standard enunciated in 9-27.220 of the Principles of Federal Prosecution.'"
It is clear that most or all of this Report is going to be publicly released. It will be interesting to compare it to DOJ OPR's report, assuming that DOJ decides to release it. Two attorneys for two of the prosecutors under scrutiny have already announced that OPR's report clears their respective clients. DOJ has a long history of ignoring the critical comments of federal judges. The latest example of this took place in reference to the prosecution of former Blackwater employees. Despite Judge Ricardo Urbina's scathing factual findings regarding the conduct and credibility of the original set of prosecutors, they were treated to a laudatory/fawning DOJ press release upon reassignment. Urbina, like Sullivan, is one of the most respected federal judges in the country and his factual findings were not questioned or disputed on appeal.
Some final thoughts.
1. For every Emmet Sullivan (or Ricardo Urbina or Howard Matz) there are 10 federal judges who unquestioningly accept the Government's representations regarding Brady issues, irrespective of non-frivolous matters brought to their attention by the defense bar.
2. The defense attorney has an obligation to ferret out Brady issues through the filing of detailed, fact-specific Brady motions closely tied to the formal allegations in the case.
3. We must rapidly move toward open discovery in the federal criminal system, with appropriate safeguards in place to protect witnesses where necessary. The presumption, however, must always be in favor of open discovery. Many states have gone this route without any disastrous consequences. It is appalling that civil litigants have substantially more access to discovery at the federal level than do people who are literally fighting for their liberty.
4. In the meantime, federal prosecutors must be relieved of the burden of determining whether exculpatory information is material. DOJ already recommends this in the Ogden Memo, but it should go one step further and require it. The rule should be: IF IT HURTS MY CASE IN ANY WAY, TURN IT OVER! When a man judges himself, the verdict is always in his favor. When a federal prosecutor, in the heat of trial or pretrial battle, is deciding whether exculpatory evidence is material, the verdict will too often be that it is not. Let's end this invitation to injustice.
5. Of course, federal prosecutors do not think like criminal defense attorneys. That's okay. We don't want them to! But this is the very reason why they cannot ultimately be trusted to make the determination of what is or is not exculpatory. The competent defense attorney headed to trial or sentencing is constantly thinking about anything that will help the defense. Prosecutors are not trained or inclined to do this. Even when they are trying to fulllfil their Brady obligations, AND THE VAST MAJORITY OF FEDERAL PROSECUTORS ARE TRYING TO DO THIS, they cannot be trusted to spot the issues. This difference in outlook/inclination/thought processes really comes to the fore during the period leading up to sentencing hearings, when the prosecutor looks at the defense attorney like a deer in the headlights when reminded of his/her obligation to provide any and all mitigating evidence!
6. Please. Let's have no more: "We understand our Brady obligations and intend to abide by them." Congress should pass a statute requiring some form of detention for any prosecutor who utters this bromide.
November 23, 2011 in Contempt, Corruption, Current Affairs, Government Reports, Investigations, Judicial Opinions, Legal Ethics, Media, Obstruction, Perjury, Prosecutions, Prosecutors | Permalink | Comments (4) | TrackBack (0)
Wednesday, May 25, 2011
According to TRAC the February 2011 statistics show an increase of 50.3% increase in white collar prosecutions from the prior month. (see here) More interesting is that white collar prosecutions are reported as being up 23.5 from levels reported in 2006. What is particularly good to see is that "aggravated identity theft" is the leading charge of the white collar charges in magistrate courts. But there are several deficiencies in this reporting process, such as what is considered within the category of white collar crime- see here.
(esp) (w/ disclosure that she is a B.S. graduate of Syracuse U.- home of the Trac Reports).
Monday, May 23, 2011
It is good to see that President Obama is using his pardon powers, granting eight pardons this past week. (See Press Release here) Clearly more pardons would have been better as there are many suffering from the collateral consequences of a conviction that should not have happened. Likewise, there are many that have significantly reformed their lives and are deserving of a second chance. Some observations about these pardons:
- Four of the eight included a conspiracy count.
- Three of the eight had a drug related charge.
- The largest sentence that had been given in any of these offenses was five years.
- Four had a sentence of no prison time.
- The most recent sentencing from these cases was 2001.
- Seven of the eight cases were prior to 2000.
- Only two cases were from the same state, that being Indiana.
An important question to ask is whether any of these cases should have been criminal activity in the first place. Did we really need to send someone to prison for "the possession and sale of illegal American alligator hides" in violation of the Lacey Act? Would a civil fine have been sufficient?
Friday, March 25, 2011
Commentary on Court Dismissal of Indictment Against Former VP & Associate General Counsel of GlaxoSmithKline
Check out - Sue Reisinger, Corporate Counsel, She Asked, Counsel Told: Case Against Glaxo Attorney Is Dismissed
The former VP and Associate General Counsel of GlaxoSmith Kline had been charged with a 6-count Indictment for the alleged crimes of obstruction (1512), falsification and concealment of documents (1519) and false statements (1000). The Indictment against Lauren Stevents has now been dismissed, but it is without prejudice.
Stevens claimed a defense to the charges of advice of counsel in her responses to the FDA's inquiry. The government response was that 18 USC 1519 is a general intent crime and therefore a "good faith reliance on advice of counsel is only a defense to specific intent crimes."
The court did not agree with the government, citing applicable sources that provide a solid basis for its holding. My take is that the statute clearly is requiring two intents - to "knowingly alters, destroys, multilates, conceals, coversup, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impeded, obstruct, or influence the investigation ....." With two intents it seems clear that one should use specific intent here.
But what is more questionable here is that the government thinks that specific intent should not be required here. Should you really prosecute someone who may not have had the specific intent to do these alleged acts? Will this achieve the deterrence from criminality that we desire? Irrespective of whether one accepts the government's claim that advice of counsel is an affirmative defense or the defense and court position that it negates the mens rea, is prosecution of this alleged conduct the way we want to spend valuable tax dollars?
This case is a perfect example of how we are failing to use our resources wisely. Do we really need to spend money prosecuting folks who may not have complied with a government discovery request properly? Or would the money be better spent using it for educating lawyers and others of how to respond to government inquiries correctly. And what happens if we turn the tables - should we start prosecuting Assistant United States Attorneys who do not comply with constitutional requirements of discovery, or would our resources be better spent educating them of the importance of upholding these constitutional rights.
Bottom line - don't refile this case.
Addendum - See here
Monday, March 7, 2011
Here's his testimony. Some highlights -
- "For decades, the government supported incentives for housing that distorted the market, created significant moral hazard, and ultimately left taxpayers responsible for much of the risk incurred by a poorly supervised housing finance market"
- "The Administration is committed to a system in which the private market – subject to strong oversight and strong consumer and investor protections – is the primary source of mortgage credit."
- "Alongside these efforts, Treasury, the Department of Housing and Urban Development, and the Department of Justice are coordinating the Administration’s interagency foreclosure task force, which is comprised of eleven federal agencies and also works closely with the state Attorneys General. In light of reports of misconduct in the servicing industry, the task force is currently reviewing foreclosure processing, loss mitigation, and disclosure requirements at the country’s largest mortgage servicers. Those that have acted improperly will be held accountable."
Friday, January 14, 2011
At the end of this past year, the Statewide Grand Jury in Florida issued its first Interim Report - Statewide Grand Jury Makes Anti-Corruption Recommendations in First Interim Report. (Report is here) According to the press release issued at that time -
"Key recommendations of the Statewide Grand Jury include:
- Expanding the definition of public employees to include private employees contracted by government entities that perform government services;
- Creating sentencing enhancements for offenses committed by officials who use their public position to facilitate their crimes;
- Creating an independent State Office of Inspector General, responsible for hiring and firing agency Inspectors General;
- Expanding definition of criminal bid tampering to include bid-rigging schemes; and
- Authorizing the Ethics Commission to initiate investigations with a supermajority vote of commission members."
This report comes at an interesting time, as the American Law Institute is gearing up for a new project called Principles of Government Ethics.
Thursday, September 9, 2010
I believe that I subscribe to every DOJ press release service pertaining to federal criminal law. My favorite press releases to read are those put out by the FBI. World class self-promoters, the folks at the Bureau like to brag every time one of their investigations results in an arrest, indictment, guilty plea, trial conviction, or sentence. Following the FBI's press releases can give you a quick, informal, and unscientific sense of what's hot and happening in federal law enforcement--at least according to the FBI. Yesterday, the Bureau issued 19 press releases related to specific federal criminal cases. Fraud is in first at 8 press releases. Robbery comes in a strong second at 5. Child pornography is third with 2. Piracy, stolen firearms, stolen cars, and prescription drug abuse limp in at 1 each. White collar crime rules the roost. We're number one!
Monday, August 2, 2010
Saturday, July 24, 2010
Here is Assistant AG Ronald Weich's letter to House Judiciary Committee Chairman John Conyers explaining DOJ's declination in the matter of former Attorney General Alberto Gonzales and the firing of U.S. Attorney David Iglesias. And here is George Terwilliger's statement celebrating the declination. Terwilliger and Bob Bittman of White & Case represented Gonzales in the investigation.
Saturday, April 10, 2010
Jennifer Niles Coffin and other members of the Sentencing Resource Counsel's Office have a wonderful new resource, and I vote it - very impressive - to assist with sentencing research. Here is how it was described to me:
"a website devoted to making available a large number of documents and materials from the Commission's public record that are not currently available on the Commission's website (and are otherwise difficult to obtain). These include nearly all public comment (including public comment regarding the initial guideline development process), written hearing testimony from early amendment cycles (and some others), hearing transcripts (before 1997), and various reports (including the mythical 1990 Firearms Working Group Report). The documents themselves are posted just as they appear in the records of the Sentencing Commission, and each document is fully searchable (although the site itself is not). The website address is www.src-project.org.
You can use these documents to figure out whether the provision was developed by the Commission in its characteristic institutional role, as the Sentencing Reform Act envisioned and as the Supreme Court has now re-emphasized. What comments did the Commission receive from stakeholders when it was contemplating the guideline or a subsequent change? What was said at the hearings? What did that staff report say? Because much of the administrative record is not available on the Commission's website (especially for the earlier amendment cycles), the answers to these questions have often remained mysteries.
You should think of this website as a library or repository for primary documents. The documents are arranged by category (public comment, transcripts, testimony, reports), so the website will be most useful when you have already targeted an amendment for an inquiry into its "legislative history" and you know the amendment cycle[s] in which the issue was under consideration. This information can be obtained by looking at the Historical Note in the Manual at the end of the guideline or policy statement at issue, then at the "Reason for Amendment" in Appendix C.
In addition, the Commission publishes every proposed and final action in the Federal Register. To find the administrative record of proposed amendments that were not adopted, or to find out whether the language of a proposed amendment evolved after the public comment period, search the Federal Register database on Westlaw or LEXIS for any notice of proposed amendments to the guideline or policy statement at issue. Then go to www.src-project.org (and the Commission's website, as appropriate) to examine the relevant materials."
(esp) (hat tip Todd Bussert)
Friday, January 15, 2010
GAO issued a third report on Deferred Prosecution Agreements (DPA) and Non-Prosecution Agreements (NPA), this time titled - DOJ Has Taken Steps to Better Track Its Use of Deferred and Non-Prosecution Agreements, but Should Evaluate Effectiveness. The report recommends that:
"To assess its progress toward meeting its strategic objective of combating public and corporate corruption, the Attorney General should develop performance measures to evaluate the contribution of DPAs and NPAs towards achieving this objective."
There were 12 U.S. District and magistrate judges who provided comments that assisted in the report. A highlight sheet on the report states that "prosecutors, company representatives, monitors, and judges with whom GAO spoke more frequently cited disadvantages to greater judicial involvement - such as the lack of time and resources available to judges and concerns about the separation of powers and constitutionality of increased judicial involvement -than advantages to such involvement-such as the court's ability to act as an independent arbiter of disputes, increased transparency in the DPA process, and decreased perceptions of favoritism in selecting the monitor."
I wonder what defense attorneys would have said if they had been consulted on this question.
Prior Reports - Prosecutors Adhered to Guidance in Selecting Monitors for Deferred Prosecution and Non-Prosecution Agreements, but DOJ Could Better Communicate Its Role in Resolving Conflicts;Preliminary Observations on DOJs Use and Oversight of Deferred Prosecution and Non-Prosecution Agreements
Tuesday, January 5, 2010
In the wake of recent events that demonstrate discovery violations (see here), DOJ has issued three new policies here. It is wonderful to see that DOJ is beefing up its discovery practices and taking a hard look at what should happen in the future. It also sounds like a better management system is being considered. But that said, looking at the actual guidance memo, here are a few preliminary comments -
- After telling prosecutors that they need to familiarize themselves with Brady, Giglio and other discovery rules and statutes, the paragraph ends with a statement that this new memo "provides prospective guidance only and is not intended to have the force of law or to create or confer any rights, privileges, or benefits." Yes, this is the standard language one finds throughout the DOJ manual. But wait a minute -- although DOJ guidelines can be guidelines, these mandates are constitutional, statutory, and rules - they often do have the force of law. This fact should be emphasized to prosecutors.
- The memo states - "Prosecutors should never describe the discovery being provided as 'open file.'" The memo explains the fears of missing something. It seems odd that the DOJ doesn't want prosecutors to accept credit when they do the right thing and provide all discovery. Saying not to call it "open," for fear of missing something, implies that this is not a policy that recognizes the value of an "open file" system that can work well and provide efficiency. And taking this one step further -- if it is not acknowledged as an "open discovery" practice, and something is missed - will it sound any better to the accused who failed to receive their discovery material?
- The memo gives no real guidance as to when a prosecutor has to turn over Jencks material, and leaves it to the individual offices to create their individual rules. It is ironic that DOJ wants sentencing consistency, but doesn't want discovery consistency. Should a defendant in Wyoming have different rights to witness statements than the defendant in New York?
- It is good to see memorialization of witness statements is important. But only turning over "material variances in a witness's statements?" Shouldn't all variances be turned over?
- It is interesting how the memo provides an extensive review process of discovery material - will this hold up getting the materials to defense counsel? Also will defense counsel be given an equal amount of time to review these materials and time to conduct additional investigation that may be warranted as a result of the materials provided?
- And yes, it is important to protect witnesses and national security - but should DOJ be the one deciding when they think they can withhold evidence? Shouldn't that be for neutral parties like the judiciary?
It is good to see DOJ trying to do a better job than past administrations, but what really needs to be done is setting forth clearer rules and statutes by independent parties, as opposed to a working group made up of "senior prosecutors from throughout the Department and from United States’ Attorney Offices, law enforcement representatives, and information technology professionals," so that our system does "do justice" as desired by AG Holder.
Wednesday, December 9, 2009
In a recent press release, President Barak Obama announced that he was establishing an interagency Financial Fraud Enforcement Task Force. The executive order (13519) lists a long list of individuals offices that will be represented on this task force (e.g. Homeland Security, FTC, SBA). Yes, TARP is also at the table. At the head of the task force is the Attorney General with the Deputy AG directing the work of the task force. The task force clearly has a mission of coordinating efforts for financial fraud prosecutions. Perhaps the most interesting aspect of the task force is found near the end of the executive order - "The Task Force shall replace, and continue the work of, the Corporate Fraud Task Force" which had been created by a 2002 Executive Order. The use of a task force is not new for DOJ. In addition to the Corporate Fraud Task Force, we have seen task forces like the Katrina Hurricane Task Force that focused on fraud. (see here).
One aspect that is particularly good to see as an aspect of this task force is its "Outreach" section. It states:
AG Holder comments on this new task force here.
Outreach. Consistent with the law enforcement objectives set out in this order, the Task Force, in accordance with applicable law, in addition to regular meetings, shall conduct outreach with representatives of financial institutions, corporate entities, nonprofit organizations, State, local, tribal, and territorial governments and agencies, and other interested persons to foster greater coordination and participation in the detection and prosecution of financial fraud and financial crimes, and in the enforcement of antitrust and antidiscrimination laws.
Sunday, September 6, 2009
As noted here, the SEC's release of the executive summary of the Madoff Report (Investigation of Failure of the SEC to Uncover Bernard Madoff's Ponzi Scheme) demonstrated that there was no finding of corrupt conduct. But the bottom line was that the ball was dropped on more than one occasion. It is, of course, easy to look back and examine the mistakes made. The 477 page Report, now released, allows that to be done. But as people ponder the sad findings in this report, the more important report and findings that need to now be made - is what to do about all of this to make certain it won't happen again. Clearly the new SEC chair has put into place some measures to allow for better regulations and control. But is this enough? Some thoughts -
- If this had been a company that had missed the red flags, the DOJ would be making them pay a lot of money, institute a more effective corporate compliance program, and probably have monitors in place to make certain that wrongdoing would not occur again.
- Is Madoff no different from the rogue employee who operates improperly and hurts innocent victims (in this case the victims are those who invested, those who benefitted from entities that had invested, and the general public).
- Will there ever be sufficient controls in place without thorough outside monitoring? In the case of corporations, the DOJ typically wants more than a company compliance program and looks for outside monitors to make certain there are no future violations. Should the SEC be held to a lesser standard? No - I am not suggesting that we employ John Ashcroft for this one.
- An Inspector General Report after-the-fact is wonderful, but where was the oversight when this fraud was occurring.
- It is easy to put blame on individuals who may have missed items, but we need to also consider their workload and whether it was reasonable for them to discover this fraud and whether more resources and systems are needed to assure they can properly perform their jobs.
- Clearly it is easy to Monday morning quarterback, especially on a Sunday over Labor Day - but this amount of fraud needs more thought and consideration.
The 477 pages tells us what happened. Now we need to examine the controls in place to assure it will never happen again.
Tuesday, May 13, 2008
White Collar Crime prosecutions continue to be extremely low, despite the fact that they have increased this past month. According to the Syracuse TRAC reporting system, there has been a 28.4 percent increase in the number of white collar crime prosecutions in the month of January. This number, however, is a -17.3 percent change from 5 years ago (including the magistrate court) and a -19.4 (excluding the magistrate court). It is disheartening to see that white collar crime is not being prosecuted at the levels that it was being handled five years ago, although AG Mukasey can credit himself with increasing these prosecutions from the last couple of administrations. Not surprising, however, is the fact that the number one charge being used by prosecutors is mail fraud - 18 U.S.C. 1341.
This reporting, however, has many deficiencies as DOJ's categories for white collar crime do not match the definition provided by many and also do not include many offenses that clearly are considered white collar crime by the individual U.S. Attorney offices (see Is DOJ Cooking the Books in its Reporting of White Collar Crime?) Interestingly, aggressive overcharging by the government, may be hurting their statistics. There is no category under white collar crime for recording the use of money laundering and RICO charges that are used by the government in so many of the white collar cases.
(esp) (w/ disclosure that she is a B.S. graduate of Syracuse U.- home of the Trac Reports).
Monday, March 10, 2008
A House Judiciary Committee hearing on deferred prosecution agreements issued its list of witnesses for the Tuesday, March 3, 2008 - 10:30 AM Subcommittee on Commercial and Administrative Law Hearing on "Deferred Prosecution: Should Corporate Settlement Agreements Be Without Guidelines?" The panelists are:
Panel I: Hon. David E. Nahmais
The U.S. Attorney's Office
Northern District of Georgia
Timothy L. Dickinson, Esq.
Paul, Hastings, Janofsky & Walker, LLP
Hon. John D. Ashcroft
The Ashcroft Group, LLC
George J. Terwilliger, III
White & Case, LLP
University of Virginia School of Law
Panel II: Hon. Frank Pallone Jr.
Member of Congress
New Jersey, 8th District
Hon. William J. Pascrell Jr.
Member of Congress
New Jersey, 6th District
Thursday, January 31, 2008
Guest Blogging - Professor Christopher W. Behan writes:
In Catch-22, Milo Minderbender started a successful enterprise, the Syndicate, that accomplished extraordinary feats of logistical and financial legerdemain: the Syndicate bought eggs for seven cents apiece and sold them at a profit for five cents apiece, used American military assets to transfer goods and products throughout an entire war theater, and even contracted with the American military to bomb a bridge that the German military was under contract with the Syndicate to defend. An amoral war profiteer, Milo defended his actions by saying, "I just saw a wonderful opportunity to make some profit out of the mission, and I took it. What’s so terrible about that?"
Milo’s Syndicate flourished in an atmosphere of enormous temptation and little oversight. In many respects, military operations in Iraq and Afghanistan offer similar temptations and remarkably, not much oversight at all given the scope of contracting operations. To an unprecedented extent, US forces rely on contractors to provide everything from bullets and beans, to translation services, maintenance, and security. Contractors have billed United States taxpayers enormous amounts of money since the beginning of the war, much of it from cost-plus contracts in which incentives for efficiency (and in some cases, even honesty) do not exist. Individuals and corporations alike have succumbed to the temptation to bribe and accept bribes, double-bill, bill for services not provided, or engage in what might charitably be called "fraud, waste and abuse."
In the past two weeks, the government has taken steps to increase oversight and end contracting abuses. The Army has transferred significant responsibility for contract oversight from the troubled Kuwait contracting office to Rockford, Illinois, Rockford Link Transferring oversight of contract activity to Rockford will permit the Army to use the technical contracting expertise and experience that seems to be in short supply in a deployed environment. According to news reports, the Army took this action after identifying the Kuwait office as a hub of corruption. The Army Criminal Investigation Command (CID) has 87 ongoing criminal investigations related to contract fraud in Iraq, Kuwait and Afghanistan, and 24 individuals have been charged with contract fraud so far. CID has uncovered evidence of more than $15 million in bribes. Those bribes involved military and civilian personnel. An Army officer, Major Gloria Davis, committed suicide after an investigation revealed she had accepted at least $225,000 in bribes; another investigation found that Army Major John Cockerham and his wife and sister accepted up to $9.6 million in bribes for defense contracts. Davis Article
Congress has begun a round of hearings into the matter of contract oversight in Iraq, Kuwait and Afghanistan. Last week, the House Appropriations defense subcommittee released a GAO report that details the Department of Defense’s shortcomings in managing contracting operations in a deployed environment. Those shortcomings include failure to plan, failure to integrate lessons learned, failure to supervise and failure to devote sufficient resources to tackling the problems. GAO Report
Still, the Department of Defense’s failure to properly plan for and supervise contractors provides no excuse for fraudulent behavior. American corporations have a shameful history of placing profits over patriotism during wartime: in past conflicts, American troops have endured rotten food, shoddy uniforms, substandard equipment, defective arms and ammunition and inadequate shelter because of the malfeasance of individuals and corporations. In the current conflicts, the American taxpayer seems to be the chief victim of contracting abuses; it’s as if the Department of Defense is a giant ATM dispensing gobs of free money to whomever will take it. And plenty of corporations and individuals have stepped up to take the money.
On Monday the 28th of January, a federal judge unsealed an indictment against Elie Samir Chidiac, a U.S. citizen, and Raman International Inc. of Cypress, Texas, which does business as Raman Corporation. Samir and Raman are charged with conspiracy to commit bribery and contract fraud with respect to military contracts in Iraq and Kuwait. [Download chiriac_indictment.pdf ] According to the DOJ press release, Chiriac Release An unidentified military contracting officer canceled contracts that were already awarded to, and often had been performed by, third-party contractors;
- The unidentified military contracting officer re-awarded those contracts to Raman and fraudulently verified that Raman had performed the requisite service or delivered the requisite goods;
- Chidiac and the unidentified military contracting officer forged various contracting documents and fraudulently modified the military contracting database in order to create the appearance of propriety with respect to these canceled and re-awarded contracts;
- The unidentified military contracting officer authorized Chidiac to receive cash payment on those contracts, which Chidiac did, despite the fact that neither Chidiac nor Raman performed any work, provided any service, or delivered any good with respect to these contracts;
- Upon receipt of cash payment from the United States, typically in U.S. $100 bills, Chidiac remitted a portion of the money back to the unidentified military contracting officer, often delivering the money to the officer at Raman’s compound, adjacent to Camp Victory; and
- The unidentified military contracting officer sent money received from Chidiac via U.S. Postal Service to a family member in Midwest City, Okla.
All of these allegations, if true, are disturbing. They illustrate the harm that can arise from greed and a lack of oversight on the part of the government. One hopes that a combination of increased congressional oversight, improved Army and DoD accountability, and an active justice system will help stem the tide of modern-day war profiteers doing business in Iraq and Afghanistan.
Monday, December 17, 2007
The 2007 Government Accountability Office Report can be found here. How would the DOJ use this evidence if this were a private company and they were proceeding against this private company in a criminal case? Will criminal/corporate defense counsel be permitted to use this report as a point of comparison when under scrutiny by DOJ?
In part the report states:
"A significant number of material weaknesses (fn5) related to financial systems, fundamental recordkeeping and financial reporting, and incomplete documentation continued to (1) hamper the federal government’s ability to reliably report a significant portion of its assets, liabilities, costs, and other related information; (2) affect the federal government’s ability to reliably measure the full cost as well as the financial and nonfinancial performance of certain programs and activities; (3) impair the federal government’s ability to adequately safeguard significant assets and properly record various transactions; and (4) hinder the federal government from having reliable financial information to operate in an economical, efficient, and effective manner. We found the following:
• Certain material weaknesses in financial reporting and other limitations on the scope of our work (fn6) resulted in conditions that continued to prevent us from expressing an opinion on the accompanying accrual basis consolidated financial statements for the fiscal years ended September 30, 2007 and 2006. (fn7)
• The 2007 Statement of Social Insurance (fn8) is presented fairly, in all material respects, in conformity with GAAP; we disclaim an opinion on the 2006 Statement of Social Insurance.(fn9)
• The federal government did not maintain effective internal control over financial reporting (including safeguarding assets) and compliance with significant laws and regulations as of September 30, 2007.
(fn5) A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity’s ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.
(fn6) Three major impediments continue to prevent us from rendering an opinion on the accrual basis consolidated financial statements: (1) serious financial management problems at the Department of Defense, (2) the federal government’s inability to adequately account for and reconcile intragovernmental activity and balances between federal agencies, and (3) the federal government’s ineffective process for preparing the consolidated financial statements.
(fn7) We previously reported that certain material weaknesses prevented us from expressing an opinion on the consolidated financial statements of the U.S. government for fiscal years 1997 through 2006.
(fn8) The valuation date is January 1 for all social insurance programs except the Black Lung program, for which the valuation date is September 30.
(fn9) We disclaimed an opinion on the fiscal year 2006 consolidated financial statements, including the Statement of Social Insurance."