Associate Attorney General Tom Perrelli told members of the Senate Indian Affairs Committee Thursday that funding for law enforcement programs in American Indian communities “must be broad and across the board.”

Tom Perrelli (DOJ)

The proposed fiscal 2011 DOJ budget includes nearly $450 million to fund initiatives in American Indian tribal lands. The department received more than $237 million in its fiscal 2010 budget for Indian country prosecutions and criminal investigations. The DOJ also made millions of dollars in grant money available to America Indian tribes, especially for programs that fight violence against women.

“While we will continue to implement changes that do not cost American tax dollars, the reality is that resources make a difference,” Perrelli told the committee. “We are working to put resources in place quickly and efficiently to help American Indian and Alaska Native communities help themselves.” (Read his prepared remarks here.)

Perrelli noted that the DOJ would be able to hire 45 new FBI agents for Indian Country with funds from the requested fiscal year 2011 budget. The proposed budget also would allow the DOJ to support more tribal police and assistant U.S. attorneys in Indian Country, he said.

Panel chairman Byron Dorgan, D-N.D., said at the hearing today that he is pleased to see the proposed increases to address Indian Country public safety.

“Let me say, this committee has fully documented and described at great length the long-standing unmet needs for increased funding in many areas of public policy dealing with American Indians,” Dorgan said.

The DOJ has made American Indian issues a top priority. Over the last year, the department has rolled out a number of new policies and plans to address Indian Country crime, which former Deputy Attorney General David Ogden said last month has hit “unacceptable levels� and is diminishing the quality of life for American Indians.

The department also intends to make the Office of Tribal Justice a separate component within the DOJ. Currently, the office is under the purview of the Deputy Attorney General but is not a permanent entity within the DOJ structure.

Since arriving on the job last year, Securities and Exchange Commission head of enforcement Robert Khuzami has battened down the agency’s enforcement hatches in a much-publicized effort to prevent another Bernie Madoff-like scandal. An important sideline to Khuzami’s quest is the creation of five new investigative units, including a Foreign Corrupt Practices Act unit headed by longtime Associate Director Cheryl Scarboro.

The SEC’s FCPA practice has never lagged, necessarily—its handling of the oil for food scandal, for example, resulted in over $150 million settlements by a dozen companies. But the investigative unit introduces a new concept to what formerly was a highly regionalized squad of FCPA enforcers: a centralized braintrust in Washington that, according to Scarboro, will create a leaner, meaner enforcement team modeled heavily after that at the DOJ.

Cheryl Scarboro (SEC)

In a recent interview with Main Justice, Scarboro talked about centralization and other related topics.

Main Justice: Robert Khuzami recently explained that one reason he set up the FCPA investigative unit is because the agency needed to be more “proactiveâ€� in FCPA investigations. In your opinion, where were the lapses? How weren’t you being ‘proactive’?

Cheryl Scarboro: What I would say is that we have been proactive in the past in these investigations. For example, there have been several investigations that have resulted from our independent work—industry wide practices we’ve investigated and brought to resolution. The oil for food matter is a good example. There was $150 million in relief, settlements with a dozen companies.

But the new unit will give us the resources and the ability to do even more going forward. People on the ground will be focusing exclusively [on FCPA investigations], making them smarter about industry practices problem areas. We will be able to leverage resources and leads we get from others

There are ongoing investigations exactly like oil for food: not just concerning one company, but looking beyond into widespread practice in particular areas. I would expect filed cases in the short term, in a matter of months. These cases will be an illustration of what we’ve already been doing. But the new unit will allow us to do even more of it. We have areas and industries we are focusing on—pharmaceutical is one.

MJ: Can you give an example of how the ‘old’ FCPA strategy in action, and how it may have come up short?

CS: We’ve been very active and successful in this area already. There are some things the unit will allow us to do that will improve upon how we approach these complex cases, which are difficult to detect. Corruption itself is something that can have serious negative impacts here and abroad: the lack of a level playing field, the extortion of prices. I don’t like to characterize our work in terms of shortcomings, but rather, in terms of building upon what we’ve done in the past, and being quicker and smarter.

One basic principle: the people doing these cases will be focusing exclusively on them. They will really learn this area of the law, the mechanisms used to pay and conceal bribes, the problems and industries around world. Every time get we smarter on that, we are able to identify the next investigation that much quicker. There are lots of hurdles in conducting international investigations. Once you’ve done that once you’ll be able to do it much faster next time.

Beyond that, people become much more creative about their investigations as they become experts in that subject area. We will have a thinktank here of people working together who are able to share ideas easier, all focusing on the same goal. We’ll be able to share our concepts, ideas, findings…there are lots of different ways how having a group of people here [in Washington] looking at problems [in SEC regional offices] around the country will make us better at our job.

That said, I expect members of the unit will not just be here but in other regional offices, that I expect will continue to play a role in terms of investigating FCPA. But those will be coordinated here. The office itself will be centralized, in constant communication, collaborating on training and ideas, working on cases.

In the past, there was no one person who was aware of what everyone was investigating. That will change. I will be the point person for all investigations: which we do, how we do them, how we resolve them.

When a case is opened at a certain time involving a certain region or industry, there will be a mechanism for everyone else doing these kinds of cases to know about it, and leverage off it better by being more coordinated. Settlements, resolutions, approaches to investigating…all these will be more consistent. There will be a program in place to ensure that consistency, so we know what everyone else is doing. I’m not saying that didn’t happen before, but its easier to do with a dedicated group of people working together on a regular basis.

MJ: It sounds like you’re modeling the unit after the DOJ?

CS: We’re different organizations, we’re structured differently: DOJ uses prosecutors, FBI agents, focuses on criminal side, does all its work in DC. But yes, the DOJ has a centralized FCPA practice in one office, and there are great benefits. I think we’ll see similar benefits: a central place to go to report potential wrongdoing. There will be a wealth of knowledge people will gain by doing these through the unit. That’s something we’ve seen at DOJ. I expect to see similarities in terms of the benefits.

We have a close working relationship with DOJ. We investigate most FCPA cases jointly. If you were to look at an announcement of an FCPA settlement or the filing of an action, you’ll see DOJ and SEC announced on the same day. It’s not unusual for civil and criminal cases to be brought simultaneously. Global resolutions make a lot of sense. Companies under investigation take account of what each of us are doing and putting together a package simultaneously makes a lot of sense. I can’t get into the heads of defendants who come and say they want to get it all over with and settle at one time. But clearly, defendants report potential misconduct to both agencies at the same time. That’s just the way it works.

MJ: What kind of cooperation do you have with foreign regulators?

CS: It’s a good relationship. Obviously it depends. Siemens is great example in which we worked well with our German criminal counterpart and brought what I thought was a strong global resolution that resolved things here and abroad at the same time. That’s something we’d like to do more of. There are many ongoing investigations in which we’re working with foreign regulators. We have MOU’s [memorandum of understandings] with a number of countries, enabling us to gather bank records. We have other countries focusing hard on the enforcement of anti-bribery laws, providing assistance when needed. There are about 38 countries that are part of OECD [the Organization for Economic Cooperation and Development]. We work closely with them. Certain countries we want to step up in terms of enforcement efforts. I won’t go into detail, but countries are at varying stages in terms of enforcement and we will continue to encourage them to do more.

MJ: Can you give an example of the new strategy in action? Have changes borne fruit yet?

CS: Well, staffing of unit is still underway. It’s oo early to state changes. I expect it will happen very soon. Interviews are ongoing over the next couple months We’re interviewing a mix of internal and external prospects. I expect to go to outside and get experts in this area.

MJ: What about the new deferred prosecution and non-prosecution agreements—which appear modeled after those at DOJ—and the new standards for cooperation from individuals, or “Seaboards�?

CS: We want to have an array of possible outcomes depending on different factors, like the level of cooperation provided [by a company]. This policy will give us even more options as it relates to that.

As for the Seaboards, they are offer more flexibility in terms of resolutions with individuals, and also in the gathering of evidence of misconduct and the incentives to do this.

In next month, I do expect announcements of cases that fit what I’m talking about.

Lawmakers at a House Judiciary Committee hearing Thursday on Comcast Corp.’s proposal to take a majority stake in NBC Universal put both company chiefs in the hot seat.

But legislators weren’t as interested in shining a spotlight on antitrust concerns as they were on examining the companies themselves and their track records on labor and diversity, as well as with independent producers.

Thursday’s hearing was the third on Capitol Hill concerning the proposed merger. The House Energy and Commerce and Senate Judiciary panels both held hearings earlier this month. A fourth panel — Senate Commerce — also plans to hold hearings on the deal.

The merger, which was announced in early December, would give Comcast a 51 percent stake in NBC Universal. NBC’s current owner, General Electric Co., would hold the remaining 49 percent.

On Thursday, members of the committee and a number of witnesses argued that the merger would lead to job losses, an idea the companies have vehemently denied. Larry Cohen, president of the Communication Workers of America (CWA), which represents employees at both Comcast and NBC, said “the combination will in fact lead to the loss of good jobs.”

Cohen also sounded a theme similar to one proposed by Sen. Al Franken (D-Minn.) at another hearing earlier this month: the companies couldn’t be trusted to keep their word.

When Comcast acquired AT&T Broadband in 2002, “they made a commitment to me that they would respect their employees’ right to a union voice on the job,” Cohen said.

But after the deal closed, he said, one executive announced: “We’re going to wage war to decertify the CWA,” Cohen said. Comcast chief Brian Roberts said the company’s labor practices were in line with the rest of the cable industry, and both Roberts and NBC’s Jeff Zucker said Thursday that the point of the deal was to combine companies that had little overlap, meaning few job cuts.

Other witnesses said the entertainment industry is structured in a way that makes it difficult for independent producers to survive, a structure the merger would exacerbate. Jean Prewitt, president of the Independent Film and Television Alliance,  said that Comcast’s interest in NBC is to “own more TV shows and feature films”  and to “avoid the transaction costs of having to deal with third parties” which would shut independent producers out.

Two members of the Judiciary panel — Reps. Shelia Jackson-Lee (D-Texas) and Maxine Waters (D-Calif.) — ripped into Roberts and Zucker for what they saw as the lack of diversity in programming and in the executive ranks at either company.

Armed with lists of board members for both companies, Waters asked Roberts why Comcast had only one woman and one black man on its board. She then asked Zucker why NBC didn’t currently have any black programming on NBC. ”Is there some assumption that black programming is not profitable?” she asked him.

Zucker said that diversity was one of his strategic goals and that the company was trying to do better.

Both Roberts and Zucker in their testimony in support of the proposed merger articulated themes similar to those from previous hearings and from their filing with the Federal Communications Commission.

Other distributors don’t have to worry, Roberts said, because the FCC rules will apply and Comcast won’t be able to discriminate against them. Other programmers also don’t have to worry, he said, because Comcast is committed to providing local and independent programming.

Roberts again framed the transaction as a so-called vertical one, which usually raises fewer concerns for antitrust regulators. Last month the Justice Department signed off on a vertical merger between ticket giant Ticketmaster and concert promoter Live Nation, albeit after requiring the parties to make some changes in the deal to address some of the vertical concerns.

Rep. John Conyers, Jr. (D-Mich.), who chairs the Judiciary Committee, sounded the alarm on vertical mergers, and ripped into the Justice Department’s enforcement record.

Ahmed Khalfan Ghailani (FBI).

A federal judge has ruled that the government must turn over memos by high-ranking Justice Department officials on the transfers of alleged terrorist Ahmed Khalfan Ghailani, the first Guantanamo detainee to move from the military commission system to civilian court, according an article in the New York Law Journal.

U.S. District Judge Lewis A. Kaplan ruled in an opinion unsealed Wednesday that prosecutors must produce the memos because they could shed light on why Ghailani was kept out of the criminal justice for almost five years.

In the opinion, Kaplan argued that the DOJ official’s memos fall under the the prosecution’s discovery obligations because the officials can be considered part of the “government” as defined by the Rules of Criminal Procedure.

“Even if those officials had no other involvement with Ghailani’s investigation or prosecution, the decisions at issue were so important to the timing and progress of this case that participation in decisionmaking renders those individuals members of the prosecution team, at least to the extent of that participation,” Kaplan wrote in the opinion.

Kaplan’s opinion was sealed after it was written in January to allow court officers time to vet the ruling to prevent disclosing national security information.

The opinion could provide ammunition for critics of Attorney General Eric Holder’s decision to try Guantanamo detainees in civilian court. Republicans, and some Democrats, have argued that evidence produced in such trials could reveal information about the U.S. anti-terrorism efforts against al-Qaeda and others.

Ghaliani allegedly took part in an al-Qaeda plot to destroy U.S. embassies in Tanzania and Kenya in 1998. He was arrested in Pakistan in 2004 then transferred to a CIA “black site.” In 2006, he was sent to Guantanmo before ultimatley being charged in a New York federal court last year.

Ghailani’s lawyers sought the DOJ memos in an attempt to dismiss his indictment on speedy trial grounds. Lead prosecutor Assistant U.S. Attorney Michael Farbiarz argued that because the DOJ officials were not intimately involved with the case the memos did not have to be produced in discovery.

Northern District of Illinois U.S. Attorney Patrick Fitzgerald is on the prosecution team for a case against two Chicago men who allegedly helped plot the 2008 Mumbai terror attacks, the Chicago Sun-Times reported today.

Patrick Fitzgerald (DOJ)

This is the second time that Fitzgerald has personally prosecuted a case since he became U.S. Attorney in 2001, the Sun-Times said. In 2003, he successfully prosecuted Muslim charity leader Enaam Arnaout, who prosecutors said had ties to al Qaeda. Fitzgerald, a noted terrorism expert, first received accolades as an assistant U.S. attorney for his successful prosecution of the 1993 World Trade Center terror attack case.

Assistant U.S. Attorneys Daniel Collins and Vicki Peters will assist Fitzgerald in prosecuting Tahawwur Rana and David Headley, who are charged with conspiracy, murder and providing material support for terrorism in relation to the Mumbai bombing that killed about 170 people, the Sun-Times said. The men also allegedly planned to attack a Danish newspaper that published a controversial illustration of the prophet Muhammad.

Fitzgerald appeared in court for the first time on Wednesday, according to the Sun-Times. He said at a hearing that some of the evidence in the terror case would receive special treatment since it is classified, the newspaper said.

A magistrate judge in federal district court in New Orleans agreed Wednesday to extend the time by which prosecutors must decide how to proceed in the case of alleged phone tampering in the office of Sen. Mary Landrieu (D-La.), the New Orleans Times-Picayune reported.

Four men — including conservative documentary film-maker James O’Keefe and Robert Flanagan, the son of Western District of Louisiana acting U.S. Attorney William Flanagan, were arrested in New Orleans on Jan. 25  and charged with entering federal property under false pretenses.

Magistrate Louis Moore agreed to motions brought on behalf of the four men to extend for a month the deadline for prosecutors with the U.S. Attorney for the Eastern District of Louisiana to seek a felony indictment, press misdemeanor charges or drop the case, the newspaper reported.

According to The Times-Picayune, Moore said the extension, which was unopposed by prosecutors, would offer the parties “additional time to conduct informal discussions and discovery and avoid or lessen additional proceedings,” suggesting the possibility of a plea deal that would likely spare the four from facing felony charges.

The Senate Judiciary Committee endorsed legislation Thursday that would create a Justice Department grant program dedicated to state, local and tribal witness assistance and protection initiatives.

The panel voted 18-1 to report the Witness Security and Protection Grant Program Act to the full Senate. Sen. Tom Coburn (R-Okla.), who was attending the White House health care summit, voted against the bill by proxy.

The House passed its version of the legislation by a 412-11 vote in June. The House version would authorize $120 million over four years. The Senate panel approved an amended version that does not specify a funding level, but would draw on existing funds for the DOJ, according to a panel spokeswoman.

The Justice Department announced Thursday that two men have been indicted in connection with the New York subway bombing plot involving Najibullah Zazi.

A federal grand jury in the Eastern District of New York charged Zarein Ahmedzay and Adis Medunjanin with terrorism violations. The two men will appear in federal court in Brooklyn Thursday.

According to a DOJ news release, “Ahmedzay, 25, a U.S. citizen and resident of Queens, N.Y., was previously indicted on Jan. 8, 2010, in the Eastern District of New York on charges of making material false statements to the FBI about his travels to Pakistan and Afghanistan and about his conversations with a fellow traveler. Medunjanin, 25, a U.S. citizen and resident of Queens, N.Y., was previously indicted on Jan. 8, 2010, in the Eastern District of New York on charges of conspiracy to commit murder in a foreign country and receiving military-type training from a foreign terrorist organization, namely al-Qaeda.”

Bernard Madoff’s former director of operations was charged with conspiracy, securities fraud and tax crimes in the Southern District of New York, the Justice Department announced Thursday.

Daniel Bonventre, who began working at Bernard L. Madoff Investment Securities, LLC in 1968, was arrested Thursday morning, the latest in the fallout from the Madoff Ponzi scheme. Thus far Madoff and two others have pleaded guilty in the case, while two computer programmers who worked for Madoff have been arrested and charged. The ongoing case has kept Manhattan U.S. Attorney Preet Bharara a busy man.

Here is the DOJ news release:

MANHATTAN U.S. ATTORNEY CHARGES DANIEL BONVENTRE, FORMER DIRECTOR OF OPERATIONS FOR BERNARD L. MADOFF INVESTMENT SECURITIES, LLC, WITH

CONSPIRACY, SECURITIES FRAUD, AND TAX CRIMES

NEW YORK – Preet Bharara, the U.S. Attorney for the Southern District of New York, Joseph M. Demarest Jr., the Assistant Director-in-Charge of the FBI’s New York Field Division, and Patricia J. Haynes, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service (IRS), announced today that Daniel Bonventre, the former Director of Operations for Bernard L. Madoff Investment Securities, LLC (BLMIS), was arrested this morning on a criminal Complaint charging him with conspiracy; securities fraud; falsifying books and records of a broker-dealer; false filings with the U.S. Securities and Exchange Commission (SEC); and filing false federal tax returns.

As alleged in the complaint unsealed today in Manhattan federal court:

For decades, Bernard L. Madoff purported to provide investment advisory (IA) services through BLMIS. In fact, Madoff defrauded thousands of IA clients out of billions of dollars through an elaborate Ponzi scheme.

In 1968, Bonventre was employed at BLMIS and served as its Director of Operations beginning at least as early as 1978. In that capacity, Bonventre was responsible for, among other things: (a) maintaining and supervising the production of the principal internal accounting documents for BLMIS, including its general ledger (the G/L) and financial statements; (b) maintaining the stock record for BLMIS and resolving any discrepancies between internal and external records; (c) supervising the use and reconciliation of BLMIS bank accounts through which the Market Making, Proprietary Trading, and IA business operations were funded; and (d) supervising BLMIS employees who were responsible for accounting and other “back office� functions, including settlement and clearing of trades executed by the Market Making and Proprietary Trading operations.

As Director of Operations, Bonventre directed that false entries be made in the G/L that concealed the scope of the IA operations and understated BLMIS’s liabilities by billions of dollars. From 1997 to 2008, more than $750 million of IA investor funds were used to support BLMIS’s Market Making and Proprietary Trading operations, but were accounted for on BLMIS’s books and records, including the G/L, so as to conceal the true source of the funds. Moreover, as Bonventre knew, the G/L did not accurately reflect the assets contained in the bank and brokerage accounts into which IA investor funds were deposited, and likewise did not reflect the liability of BLMIS to its IA clients that arose from the custody of IA client funds in those accounts. At various points in time, the assets and associated liabilities of BLMIS’s IA operations, which were omitted from the G/L, ranged from millions to billions of dollars.

Between November 2005 and June 2006, BLMIS experienced a liquidity crisis caused by IA clients’ demands for withdrawals that exceeded cash on hand. Rather than sell securities to meet those demands – which could not be done because BLMIS had not actually purchased any such securities on behalf of those Clients – Bonventre requested $145 million of loans from a bank, using $154 million of an IA client’s bonds as collateral, to meet obligations to other IA clients. During the same period, Bonventre monitored lines of credit, which BLMIS drew down by more than $340 million and used to meet IA clients’ withdrawal requests. Bonventre also created false and fraudulent books and records that had the effect of disguising $262 million worth of payments to IA clients from the principal bank account that funded BLMIS’s operations as purchases of bonds and other debt instruments when, in fact, no such purchases had been made.

During the liquidity crisis, BLMIS was required to file Financial and Operational Combined Uniform Single Reports (FOCUS Reports) with the SEC. Those FOCUS Reports require the production of basic information that amounts to a condensed version of a broker-dealer’s general ledger. Because the G/L was inaccurate, as Bonventre well knew, the FOCUS Reports were likewise false because they failed accurately to reflect BLMIS’s assets and liabilities. For example, one such report, for the month of April 2006, in the midst of the above-described liquidity crisis, failed to reflect at least $299 million in BLMIS liabilities related to $154 million of an IA client’s bonds and the $145 million that BLMIS had borrowed using those bonds as collateral.

In as early as 1983, Bonventre also had his own IA account at BLMIS. Between 2002 and 2006, Bonventre obtained more than $1.8 million in at least three fictitious backdated trades that appeared in his account. For example, one purported trade, which appeared in Bonventre’s IA account in 2002, included a purchase that was backdated twelve years, to 1990, and generated purported long-term capital gains of nearly $1 million. Bonventre is also charged with four counts of filing false federal tax returns related to his accounting for the three fictitious trades, and his failure to report a total of approximately $273,620.24 in income that he obtained from BLMIS bank accounts in 2003, 2004, 2006, and 2007.

Bonventre, 63, faces a statutory maximum sentence totaling 77 years in prison: five years on count one (conspiracy), 20 years on each of counts two, three and four (securities fraud, falsifying books and records of a broker-dealer, and false filings with the SEC), and 3 years on each of counts five through eight (subscribing to a false tax return).

Bonventre will be presented later today before U.S. Magistrate Judge Theodore H. Katz in Manhattan federal court.

U.S. Attorney Preet Bharara stated: “As Bernard Madoff’s Director of Operations, Daniel Bonventre allegedly authored the fraudulent books that for years effectively hid the doomed state of an investment firm founded in fraud. Today’s arrest reflects the government’s ongoing commitment to ensure that those who are criminally responsible for this massive Ponzi scheme will be held accountable. Together with our law enforcement partners at the FBI and IRS, we will continue to investigate this colossal deception.�

FBI Assistant Director-in-Charge Joseph Demarest Jr. stated: “Bonventre’s crimes consist not merely of failing to disclose material information about the Madoff investment advisory business. He affirmatively fabricated basic financial documents to conceal the dire condition of a financial empire that was really a house of cards. Bonventre’s is just the latest in a succession of arrests that put to lie Madoff’s original contention that he alone was responsible for this debacle. The FBI will continue to ensure that everyone criminally culpable in the Madoff fraud is brought to justice.â€�

IRS Special Agent-in-Charge Patricia J. Haynes stated: “The public relies on people who oversee the accounting function of a firm. They are expected to be trustworthy, dependable, and reliable to help make sense out of complicated financial information so the public can make sound fiscal decisions. Compliance of the tax laws and filing accurate tax returns are not only symbolic of the trust the public has come to rely on, but it’s the law. IRS Special Agents will continue to devote resources to investigate allegations of breaches of trust and violations of the tax law.â€�

Assistant U.S. Attorneys Marc Litt, Lisa A. Baroni and Barbara A. Ward are in charge of the prosecution.

The charges and allegations contained in the complaint are merely accusations and the defendant is presumed innocent unless and until proven guilty.

A DOJ spokeswoman told TPMmuckracker Wednesday that Attorney General Eric Holder has the “utmost confidence” in the department’s ethics division, the Office of Professional Responsibility.

The office has come under fire since it issued a report Friday on the professional conduct of former Office of Legal Counsel officials Jay Bybee and John Yoo. The OPR report found the two Bush-era lawyers committed professional misconduct, but in a sharply critical 69-page memorandum Associate Deputy Attorney General David Margolis downgraded that conclusion to say Bybee and Yoo exhibited “poor judgment.”

According to TPM, DOJ spokeswoman Tracy Schmaler said:

“The attorney general continues to have the utmost confidence in that office and its leadership. As the office that investigates allegations of misconduct by department attorneys, OPR serves a crucial role for the department.”

Read the rest of their post here.