The current issue of the Washingtonian magazine includes a long piece about the Obama administration’s controversial leak investigations – with a star turn by former Public Integrity Section chief William Welch II.
Bill Welch (© 2009 The Republican Company)
As Main Justice reported in April, Welch is now investigating leaks of government information to journalists, after stepping down as head of Public Integrity last year amid the crumbling of the public corruption case against ex-Sen. Ted Stevens (R-Alaska).
“Barack Obama hates leaks, and thanks to a tenacious prosecutor, the Justice Department is on its way to setting a record for leak prosecutions,” the Washingtonian wrote, referring to Welch.
Welch is leading the investigation into the identity of a source for New York Times reporter James Risen’s book, “State of War,” which included a chapter about a botched covert CIA operation in Iran. He is also prosecuting former National Security Agency official Thomas Drake, who is accused of providing a Baltimore Sun reporter with information about wasteful spending at the NSA.
Welch may also be tapped for a case against Fox News journalist James Rosen, who reported last June that U.S. intelligence officials warned Obama that North Korea might perform a second nuclear test in protest of a U.N. Security Council resolution condemning its latest test, the magazine reported.
The Washingtonian piece includes a large glossy photograph of Welch. It also discusses the controversies surrounding the Justice Department’s investigation, including the DOJ’s subpoena of Risen for information about his source.
Risen’s book, for example, details a failed covert military operation codenamed Merlin aimed at reducing the pace of Iran’s nuclear program. He described secret meetings, dialogue with operatives and intelligence gaffes, incurring the wrath of the CIA.
Welch was also assigned to the case against Drake, who was charged in June with violating the Espionage Act by disclosing information about NSA spending.
For months Drake lobbied internally against an agency decision to adopt costly intelligence software instead of a cheaper, promising alternative before eventually abandoning traditional channels, according to a profile by the New York Times. The government alleges he took secret NSA reports home, collected information from unwitting colleagues and sent tips via an encrypted e-mail account to the Sun reporter.
The irony is that Welch himself came under investigation in the Stevens probe because of the actions of a government whistleblower.
Following Stevens’ conviction in 2008, FBI agent Chad Joy filed a complaint alleging the lead FBI agent on the case engaged in inappropriate relations with the government’s key witness, including a meeting alone at a hotel room.
He also claimed that a federal prosecutor under Welch attempted to dissuade a defense witness from testifying to keep out evidence that would contradict a government witness’s testimony.
Joy asked for protection as a whistleblower, and during a December 2008 hearing, Welch and other prosecutors leveraged his request to argue the court should seal the case to protect his identity — the very argument he’ll attempt to counter in future leak cases.
Sealing the case would have kept Stevens’ lawyers from the material in question.
A month later, however, Welch reversed his argument, saying Joy should not be granted whistleblower protection. The judge asked for an explanation from Attorney General Eric Holder, writing in a letter that he believed several attorneys may have “withheld important information from the court,” the Washingtonian reported.
Holder moved to drop the case against Stevens after an internal DOJ probe found irregularities with evidence handling. U.S. District Judge Emmet Sullivan, who presided over the Stevens trial, granted the motion to dismiss and also ordered a criminal contempt of court investigation of the prosecutors, which is ongoing.
Amid the fallout, Welch left the Public Integrity Section to return to Massachusetts, where he continued to work in the Criminal Division.
Criminal defense attorney David Hoose told the Washingtonian Welch is a smart choice for the leak cases.
“Once he sets his sights on someone, he’s like a piranha,” he said. “He’s on them with everything he’s got. Yet at the same time, I would not expect him to cheat.”
Swiss-based freight forwarder Panalpina Inc. will pay $375,000 to settle allegations the company gave kickbacks to employees of an engineering firm under contract with the U.S. Army to provide logistical support, the Justice Department said on Friday.
The settlement resolves the department’s civil case against Panalpina, but the company is under criminal investigation for potential violations of the Foreign Corrupt Practices Act stemming from its dealings in Nigeria. The company said in SEC filings that it set aside about $110 million for a settlement, which is expected in the near future.
In the kickback case, the Justice Department had charged Panalpina with lavishing employees of Kellogg Brown & Root Inc. with meals, drinks, tickets to sports events and golf outings to secure favorable treatment on subcontracts in Iraq and elsewhere.
The government is pursuing claims against KBR, the department said.
In an already settled case involving KBR, Eagle Global Logistics Inc., a transportation services company, paid about $5.1 million to settle claims that its employees paid kickbacks to KBR employees.
See the department news release is below.
WASHINGTON. – Swiss-based freight forwarder Panalpina Inc. has agreed to pay the United States $375,000 to settle allegations that the company paid kickbacks to employees of Kellogg Brown & Root Inc. (KBR). The kickbacks, which related to shipping orders issued in connection with KBR’s contract with the U.S. Army to provide logistical support to the U.S. military in Iraq and elsewhere, are alleged to violate the False Claims Act and the Anti-Kickback Act.
The settlement resolves allegations that Panalpina provided kickbacks in the form of meals, drinks, tickets to sports events and golf outings to employees in KBR’s transportation department in order to gain favorable treatment on subcontracts under the U.S. military’s Logistics Civil Augmentation Program (LOGCAP III). Under the LOGCAP III contract, KBR was to provide logistical support for U.S. military operations abroad.
Under the terms of the settlement agreement, Panalpina will pay the United States $375,000 to resolve its potential liability under the False Claims Act, the Anti-Kickback Act and common law theories. The United States previously settled claims with Eagle Global Logistics (EGL) (now CEVA) related to the same lawsuit for a total of $5,050,000. The government is continuing to pursue claims against KBR based on its employees taking kickbacks from Panalpina and EGL.
“Kickbacks paid for military subcontracts undermine the integrity of the government contracting process,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “We will not tolerate wartime profiteering at the expense of taxpayer dollars.”
The allegations against Panalpina were originally raised in the course of a lawsuit filed in the U.S. District Court for the Eastern District of Texas by David Vavra and Jerry Hyatt, two individuals active in the air cargo business. Under the qui tam, or whistleblower, provisions of the False Claims Act, private citizens can file suit on behalf of the United States and share in any recovery. Vavra and Hyatt will receive $78,750 as their share of this settlement.
This case is being prosecuted as part of a National Procurement Fraud Initiative. In October 2006, the Deputy Attorney General announced the formation of a National Procurement Fraud Task Force designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The Procurement Fraud Task Force is chaired by the Assistant Attorney General for the Criminal Division and includes the Civil Division, U.S. Attorneys’ Offices, the FBI, the U.S. Inspectors General community and a number of other federal law enforcement agencies. The Defense Criminal Investigative Service and FBI participated in the investigation of this matter. This case, as well as others brought by members of the task force, demonstrates the Department of Justice’s commitment to ensuring the integrity of the government procurement process.
FLORIDA BUSINESSMAN SENTENCED TO 57 MONTHS IN PRISON FOR ROLE IN FOREIGN BRIBERY SCHEME
WASHINGTON – A Miami businessman was sentenced today to 57 months in prison for his participation in a conspiracy to pay bribes to former officials of the Republic of Haiti, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; and Daniel W. Auer, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI) Miami Field Office.
Juan Diaz, 52, was also ordered by U.S. District Court Judge Jose E. Martinez to serve three years of supervised release following his prison term. Judge Martinez ordered Diaz to pay $73,824 in restitution and to forfeit $1,028,851. Diaz pleaded guilty on May 15, 2009, to a one-count information charging him with conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and money laundering.
In his plea, Diaz admitted to conspiring to make corrupt payments to foreign government officials for the purpose of securing business advantages for three different Miami-Dade County telecommunications companies from the Republic of Haiti’s state-owned national telecommunications company, Telecommunications D’Haiti. Diaz concealed these payments in part by laundering the funds through his company, J.D. Locator Services. According to court documents, Diaz paid and concealed $1,028,851 in bribes to former Haitian government officials while serving as an intermediary for the three private telecommunications companies. One of these officials, Robert Antoine, admitted his acceptance of bribes, including bribes from Diaz and pleaded guilty on March 12, 2010, to money laundering conspiracy. Antoine was sentenced to four years in prison.
A portion of the J.D. Locator funds was also laundered by Jean Fourcand of Fourcand Enterprises, who pleaded guilty on Feb. 19, 2010, to money laundering, and was sentenced to six months in prison for his involvement in the scheme. Antonio Perez was, at times, the controller of one of the Miami-Dade County telecommunications companies. Perez pleaded guilty on April 27, 2009, to conspiring to commit FCPA violations and money laundering and is awaiting sentencing.
Joel Esquenazi and Carlos Rodriguez, the owners of one of the Miami-Dade County telecommunications companies; Jean Rene Duperval, who was director of international relations of Haiti Teleco from June 2003 to April 2004; and Duperval’s sister, Marguerite Grandison, were indicted along with Antoine on Dec. 4, 2009. Trial for these remaining defendants is scheduled to begin Dec. 6, 2010, in U.S. District Court in Miami. An indictment is merely an accusation, and defendants are presumed innocent until proven guilty beyond a reasonable doubt.
The Department of Justice is grateful to the government of Haiti for providing substantial assistance in gathering evidence during this investigation. In particular, Haiti’s financial intelligence unit, the Unité Centrale de Renseignements Financiers, the Bureau des Affaires Financières et Economiques, which is a specialized component of the Haitian National Police, and the Ministry of Justice and Public Security provided significant cooperation and coordination in this ongoing investigation.
The case was prosecuted by Assistant U.S. Attorney Aurora Fagan of the U.S. Attorney’s Office for the Southern District of Florida, Senior Trial Attorney Nicola J. Mrazek of the Criminal Division’s Fraud Section and Trial Attorney Kevin Gerrity of the Criminal Division’s Asset Forfeiture and Money Laundering Section. The Criminal Division’s Office of International Affairs also provided assistance in this matter. The case was investigated by the IRS-CI Miami Field Office.
U.S. District Court Judge Susan Bolton, who sided with the U.S. Justice Department this week in a ruling against Arizona’s immigration bill, has been receiving threats since she issued her decision.
“She has been inundated,” said U.S. Marshal for Arizona David Gonzales, according to The Arizona Republic.
Gonzales described the judge as “tough as nails” and said he has been speaking with her daily. He indicated federal agents take the threats seriously, but said most of the hate mail came from people who were frustrated over her decision.
“About 99.9 percent of the inappropriate comments are people venting,” Gonzales said. “They are exercising their First Amendment rights, and a lot of it is perverted. But it’s that 0.1 percent that goes over the line that we are taking extra seriously.”
Gonzalez said that marshals would increase their security presence at the courthouse, but would not discuss specific security enhancements.
The U.S. Marshals Service has a policy of not commenting on protection details they may or may not have in place, said Jeff Carter, a spokesman for the Marshals Service.
The threats against Bolton fit into a wider nationwide pattern of increased threats against judges. Improper communications and threats to federal prosecutors and federal judges more than doubled during the mid-2000’s, according to an Office of the Inspector General report released earlier this year.
In an interview in May, U.S. Marshals Service Director John Clark said the increased number of threats against judges was related to the wide availability of information about judges and the publication of their decisions on the Internet.
“In today’s world, there are more individuals who are more prone to threatening judges. I think a lot of it has to do with the availability of information with the use of technology and the Internet. Individuals can find out more about particular cases and judges decisions. They can use Internet sources to find out more about the judge. So if someone is prone to want to threaten someone, there are a number of ways they can find material about a judge,” Clark said.
Clark said the U.S. Marshals has strengthened their already close relationship with the judiciary, and increased awareness about the importance of reporting any problems.
“Whenever I travel, I meet with chief judges and district judges and U.S. attorneys to make sure that they have my number, they know how to get a hold of me, and that we are available to them on short notice,” Clark said.
The U.S. Attorney for the Middle District of North Carolina is likely nearing the end of her tenure in the office as one of an increasingly rare group of long-tenured Republican appointees.
Anna Mills Wagoner and Ripley Rand (Gov)
Anna Mills Wagoner, who has led the Greensboro, N.C.-based U.S. Attorney’s office since 2001, is one of 13 U.S. Attorneys appointed during the George W. Bush administration who are still holding their jobs more than a year and a half after Barack Obama became President.
But Wagoner’s days in office appear to be numbered now that the president has tapped Ripley Rand to replace her.
Former U.S. Attorney Walter C. Holton Jr. of the Middle District of North Carolina, who served from 1994 to 2001, told Main Justice that the White House seemed to take an “awfully long time” to makes its choice of a U.S. Attorney for the district. Sen. Kay Hagan (D-N.C.) asked Obama in July 2009 to consider Rand for the job.
Holton said the Obama administration appeared to be content with the leadership of Wagoner. U.S. Attorneys serve at the pleasure of the president, but many step down near the start of a new administration. Moreover, after the uproar over the firing of federal prosecutors under former Attorney General Alberto Gonzales, Justice Department officials are wary of pressuring U.S. Attorneys to step down.
A spokeswoman for the U.S. Attorney’s office in Greensboro did not respond to requests for comment.
“Clearly, she’s doing a good job,” said Holton, who is now an attorney in Winston-Salem, N.C. “There is a comfort level in her ability to manage the office.”
Another North Carolina U.S. Attorney is also among the longer-serving top federal prosecutors. George E. B. Holding, the top federal prosecutor in Raleigh, N.C., has been in office since 2006. Hagan has asked Attorney General Eric Holder to keep Holding so that he can complete several politically sensitive cases involving Democrats.
Holding’s office has been involved in several such inquiries, including an investigation into the campaign finances of former Democratic senator and presidential candidate John Edwards. The office is also examining the activities of the state’s former Democratic governor, Mike Easley.
Posted in News | 1 Comment »
Acting Utah U.S. Attorney Carlie Christensen is now the interim U.S. Attorney, an administrative change in status that reflects the Obama administration’s difficulties in making a permanent appointment to head the office.
Christensen, a veteran prosecutor, had been acting U.S. Attorney since George W. Bush appointee Brett Tolman resigned in December. The federal Vacancies Act allows officials to serve in an acting capacity for no longer than 210 days.
Attorney General Eric Holder appointed Christensen to the interim post, which becomes effective today, the Salt Lake Tribune reported.
Utah Democrats are angry about reports the White House is considering a Republican to fill the state’s top federal prosecuting job.
The White House is reportedly looking at nominating the former deputy director of the Office of National Drug Control Policy, Scott Burns.
The White House dropped consideration of David Schwendiman, a career Assistant U.S. Attorney who had been considered the likely nominee. Schwendiman had been recommended by the state’s only congressional Democrat, Rep. Jim Matheson.
Maxwell Technologies Inc., a maker of electrical components, announced on Thursday it had set aside an additional $3.4 million to settle foreign bribery allegations from the Justice Department and the Securities and Exchange Commission.
The company previously disclosed it was in talks with the agencies to resolve an investigation into its Swiss subsidiary, and it set aside $9.3 million at the end of 2009 for a potential settlement.
In today’s filing, Maxwell said it had negotiated a $6.35 million settlement with the SEC, pending approval by the full commission. Half of that amount will be paid upon signing, with the rest paid out one year later, the company said.
But settlement discussions with the DOJ are a few steps behind, Maxwell said. The company offered the same $6.35 million to the Justice Department and is waiting to hear back. The DOJ had previously said it would accept $8 million, according to the filing.
The Justice Department had also offered settlement terms that could include a three-year payment plan, Maxwell said.
The Justice Department filed suit against Oracle Corp., on Thursday, accusing the database provider of cheating the federal government on a software contract that spanned just under a decade and involved hundreds of millions of dollars in sales.
(Oracle)
The suit, filed in federal court in Virginia, was originally filed in 2007 by a former Oracle executive who served as a senior director of contract services.
The executive, Paul Frascella, left the company in 2008.
The Justice Department accused Oracle of providing “false, incomplete, and inaccurate” information to the government about its commercial pricing practices during contract negotiations in 1997 and 1998.
Oracle then offered better discounts to its commercial customers but didn’t report those discounts or provide comparable prices to the government, even though it was obligated to do so under the contract, the complaint alleged.
The DOJ also accused Oracle of manipulating those commercial sales in order to avoid granting similar discounts to the government.
Read the Justice Department’s complaint here.
Oracle is represented by John N. Nassikas, and Kristen Ittig of Arnold & Porter LLP. Nassikas declined to comment on the case.
“We take seriously allegations that a government contractor has dealt dishonestly with the United States,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “When contractors misrepresent their business practices to the government, taxpayers suffer.”
When the Justice Department intervenes in similar whistleblower suits, it often announces a settlement concurrent with its complaint. No such settlement was filed with today’s case.
Oracle has fought the Justice Department before and won. In 2004, the Antitrust Division lost its bid to stop Oracle’s merger with PeopleSoft.
Additional reporting by Joe Palazzolo.
By adding just four new words to a list of items the FBI can demand without a judge’s approval, the Obama administration hopes to make it easier for law enforcement officers to obtain records of an individual’s Internet activity, The Washington Post reported.
The administration wants to add the new category of “electronic communication transactional records” to a list of items agents can obtain without a warrant if the information is relevant to a terrorism or intelligence investigation, The Post said.
Officials said the new language is a technical clarification. But industry lawyers and civil liberties advocates said the change would represent an expansion of the government’s power, according to The Post.
According to government lawyers, the proposed category of information would include the addresses to which an Internet user sends e-mail; the times and dates the e-mail was sent and received; and possibly a user’s browser history. It would not include the content of e-mail or other Internet communication, the lawyers said.
“The Administration has proposed to clarify a statute that already requires Internet service providers to produce ‘electronic communication transactional records’ to the FBI upon request. The statute as written causes confusion and the potential for unnecessary litigation,” Justice Department spokesman Dean Boyd said in a statement. “This clarification will not allow the government to obtain or collect new categories of information, but it seeks to clarify what Congress intended when the statute was amended in 1993.”
Added Boyd: “The term ‘electronic communication transactional records’ includes, for example, records regarding a customer’s communication transactions, records regarding contact between facilities and the means used to access a given facility. The term would not include the content of communications. These categories of information are analogous to subscriber information and toll billing records for ordinary telephone service.”
The FBI has come under fire in recent years for its use of national security letters. A Justice Department Inspector General report released in January found that the FBI went around the requirements of the Electronic Communications Privacy Act and internal guidelines to obtain phone records.
Service providers entered into contracts with the FBI so their employees could work in the bureau’s Communications Analysis unit. Those private company employees were treated as members of the team by FBI employees, were assigned their own e-mail accounts and attended staff happy hours.
FBI agents made informal requests for phone records via e-mail, post-it notes, by telephone and used what the FBI referred to as “sneak peeks” — all informal approaches that the inspector general found were improper. One FBI agent said having those employees in the office was like “having an ATM in your living room.”
The White House is asking Congress to make the changes to the Electronic Communications Privacy Act beginning in the fiscal 2011, which starts in October.
This post has been updated since it was originally published.
