Southern District of New York U.S. Attorney Preet Bharara, speaking to an audience of top white collar defense lawyers in New York Wednesday, said early cooperation from defense lawyers will burnish their reputations within the office and earn them and their clients credit.
Bharara told the defense veterans that tipping prosecutors early will enable the government to get a jump on getting authorizations for all-important wiretaps and other tools law enforcement now uses to track down sophisticated insider trading scams employing anonymous cell phones, bank robberies at the click of a mouse, global financial frauds tied to corrupt foreign officials, corporate intellectual property thefts by rivals and ex-employees, and old-school crime syndicates involved in Medicare fraud.
Whether your bad actor is is an individual or a business entity, “a reputation for intransigence or willful blindness will inevitably not help,” Bharara told a rapt audience of veteran defense lawyers — including many former SDNY prosecutors — attending the New York City Bar Association event. But a reputation for coming clean as soon as misconduct surfaces, even before an internal whistleblower comes forward, “is like gold in the bank,” Bharara said.
“So, please don’t be strangers. Come and see us, and tell us about crimes. I promise we will be all ears,” he added.
Bharara said the investigation and prosecution of illegal insider trading is a top priority for his office, the FBI and the Securities and Exchange Commission as well. He compared trading on inside information to using steroids. And since Galleon- type insider trading scams have proliferated, it’s incumbent on prosecutors to use “every lawful investigative tool available to investigate and prosecute,” he said.
“Recordings are the absolute best evidence, and so we will not shrink from using them,” he told the defense lawyers. “The question of why we use wiretaps to investigate illegal insider trading is, to my ear, like asking a defense lawyer, ‘Why do you cross examine the government’s witness at trial?’ In bothcases you do it to get at the truth.”
Bharara referred to an appellate argument on Oct. 4 in which the lawyer for Galleon hedge fund founder Raj Rajaratnam challenged the legality of investigators’ recording his private conversations in the insider trading probe; Rajaratnam’s lawyers argued the government could not meet the burden of showing the necessity of the tap, Bharara said. And just a few floors above in the same courthouse, another well-known defense lawyer was arguing equally strenuously to a jury that his client, ex-Jeffreys Group trader Joseph Contorinis, should be acquitted because the government had no recordings to prove its insider trading case against him.
“So I am here to tell you that court-authorized wiretaps, so long as all the legal requirements can be met, will continue to be in our toolbox in insider trading cases,” he said.
Bharara reiterated earlier comments about taking his responsibility to be independent seriously. The issue arose this summer in the Russian spy case, when some worried that his office became a rubber stamp for the White House. At the time, Bharara and two of his aides monitored the arrests from an FBI command center, and SDNY prosecutors appeared in courtrooms in Alexandria, Va., and Boston to handle the arraignments, while the lead prosecutor on the case and co-chief of the office’s terrorism unit, Michael Farbiarz, oversaw the efforts in Manhattan. Farbiarz, his deputy Boyd M. Johnson III and Criminal Division Chief Richard B. Zabel met in his office and conducted a review of earlier spy swap cases. Bharara said the review was helpful because it indicated that his office was not “in uncharted territory.”
On the political corruption front, SDNY prosecutors are currently pursuing a criminal investigation of Afghan President Hamid Karzai’s eldest brother, Mahmoud Karzai. The team assigned to the case draws from different units in the office and most likely includes the public corruption unit is headed by Daniel Stein, 35, who has exposure to Afghanistan issues through his previous job in the former International Narcotics Trafficking unit. It may also involve prosecutors from the newly combined unit, Terrorism and International Narcotics, a new 21-prosecutor unit headed by Farbiarz, 36, who had served as a deputy in the former terrorism unit, and Anjan Sahni, 33, formerly the chief of former International Narcotics unit. Jocelyn Strauber, 36, is their deputy. The unit handled all the Iraqi Oil-For-Food cases.