R. Allen Stanford, the indicted Texas investor accused of running a multibillion dollar fraud has dropped his suit against Justice Department officials and other federal authorities whom he claimed infringed on his constitutional rights, Talking Points Memo reported Thursday.
In his suit, filed in February, Stanford alleged that members of the DOJ, FBI and Securities and Exchange Commission engaged in “abusive law enforcement,” according to The New York Times. He asked for $7.2 billion.
The suit, which a federal judge dismissed Monday, could be brought again. Stephen R. Cochell, Stanford’s lawyer, wrote in a court filing that allegations in the suit “will be preserved without pursuit of this case at this time,” according to TPM.
Stanford is currently at Butner, N.C., prison, TPM said. He was not granted bail after his 2009 indictment, according to The Times.
Joseph Nacchio, the former Qwest Communications International Inc. chief executive serving a 70-month prison sentence for insider trading, is suing his defense lawyer Herbert Stern, for “professional negligence” and over-billing, citing careless representation and fees for hotel in-room movies and underwear.
The seven-page complaint accuses Stern, a former U.S. Attorney and federal judge in New Jersey, and his Livingston, N.J. firm, Stern & Kilcullen LLC, of being “negligent and careless in handling the defense of the criminal action,” which resulted in his conviction on 19 of 42 counts of insider trading in April 2007 after a 21-day federal trial in Denver. Stern, the top federal prosecutor in New Jersey from 1971-73, billed Nacchio more than $25 million for representation in criminal and civil issues, the court papers said.
“Among other things, they were barred by the trial court from calling a critical expert witness by virtue of their blatant failure to comply with basic litigation procedures,” said Nacchio, who left his home in Mendham, N.J. for a Schuylkill County, Pa. prison camp in April 2009 and is due out in May 2014. His suit was filed yesterday in state Superior Court in Newark, N.J.
Nacchio resurrects the basis for an earlier ineffective-assistance-of-counsel claim that arose earlier in the federal appeals process; it was roundly rejected by the 10th U.S. Circuit Court of Appeals in 2009, though one dissenting appeals judge wrote that “defense counsel behaved inexplicably, which is to say they performed below the level expected of competent counsel.”
Securities law professor J. Robert Brown of the University of Denver’s Sturm College of Law, who sat through and wrote about Nacchio’s trial, said the work of Stern and his five-lawyer team was competent. Brown not only found the dissent “hard to swallow,” but he said Stern’s team “seemed prepared at every turn.”
Had Nacchio’s defense actually submitted information on methodology or requested a hearing on a trial judge’s decision to exclude a key defense expert, “it’s possible the evidence would still have been excluded, only this time on a more complete record that would have been harder to reverse,” Brown said.
In New Jersey legal circles yesterday, Nacchio’s suit, filed by plaintiffs’ malpractice lawyer Bruce Nagel of Nagel Rice LLP in Roseland, N.J., was seen perhaps as “one of those malpractice suits that’s really a defense against a bill collection action.”
Stern did not immediately return a call for comment. Nagel did not provide details on the pricy undergarments and the titles of the in-room movies. But Nacchio’s trial team were visiting Denver from New Jersey and billing for meals and lodging.
“This is a really sad case,” Nagel said in a statement yesterday. “Bad lawyering resulted in a long jail sentence and $70 million in fines and Nacchio was grossly overbilled in the process. It’s time to deal with this unnecessary injustice.”
Nacchio gave Stern a $5 million retainer in November 2005, the suit said. After Nacchio was convicted, Stern billed him more than $2 million for work on an appeal, even though Maureen Mahoney and Sean Berkowitz of Latham & Watkins LLP were brought in to handle it.
Nacchio gained folk hero status in 2007 when he refused to participate in the National Security Agency’s collection of information about who was calling whom. He was one of the few CEOs to take the position, arguing that the requests violated the privacy requirement of the Telecommunications Act. Stern was his attorney.
Federal investigators now can hold terrorism suspects longer than other suspects without reading them Miranda rights, according to a FBI memo reviewed by the Wall Street Journal.
Law enforcement officials are required to read suspects Miranda rights before they are interrogated to inform them about their constitutional rights. If they fail to do so, suspect statements are not admissible in court.
According to the Journal, the directive — which was written in December but has not been made public — is one of the Obama administration’s most significant revisions to rules regarding the investigation of domestic terrorism suspects and could result in a serious debate over national security policy.
The memo reviewed by the newspaper says the policy applies to “exceptional cases” where investigators “conclude that continued unwarned interrogation is necessary to collect valuable and timely intelligence not related to any immediate threat.” This would require prior approval from FBI supervisors and Justice Department lawyers, according to the memo.
DOJ spokesman Matthew Miller told the Journal that the memo ensures that “law enforcement has the ability to question suspected terrorists without immediately providing Miranda warnings when the interrogation is reasonably prompted by immediate concern for the safety of the public or the agents.” He said “the threat posed by terrorist organizations and the nature of their attacks—which can include multiple accomplices and interconnected plots—creates fundamentally different public safety concerns than traditional criminal cases.”
Last year, Attorney General Eric Holder suggested changing the guidelines after controversy arose when two terrorism suspects — the Christmas Day 2009 bombing, Umar Farouk Abdulmutallab, and Times Square bombing suspect Faisal Shahzad — were questioned before Miranda rights were read.
In related news, a new bill — introduced by Sens. Joseph Lieberman (I-Conn.) and Susan Collins (R-Maine), the chairman and ranking member on the Senate Homeland Security and Governmental Affairs Committee, and House Judiciary Committee Chairman Lamar Smith (R-Texas) — would require the Attorney General to consult with U.S. intelligence officials before giving foreign terrorists Miranda rights.
The officials include the Director of National Intelligence, Director of the National Counterterrorism Center, Secretary of Homeland Security and Secretary of Defense.
Ronald W. Sharpe (Tulane University, Stanford Law School) is nominated to be the U.S. Attorney for the Virgin Islands. He would replace Paul A. Murphy. Sharpe is the district’s current interim U.S. Attorney.
Ronald W. Sharpe (DOJ)
His vitals:
- Born in Washington, D.C., in 1965.
- Attended but did not graduate from Howard University.
- Has worked in the Virgin Islands U.S. Attorney’s office since September 2009.
- Worked in the U.S. Attorney’s office in the District of Columbia from September 1995 to September 2009. He served as First Assistant U.S. Attorney from November 2008 to September 2009.
- Was an associate at Jones, Day, Reavis & Pogue (now Jones Day) in Washington, D.C., from September 1991 to May 1995. Was a summer associate at the firm in 1990.
- Interned at the NAACP Legal Defense and Education Fund in Washington, D.C., during the summer of 1989.
- Worked as an accounting technician for the Federal National Mortgage Association in Washington, D.C., from September 1987 to August 1988.
- Served in the U.S. Air Force from September 1983 to March 1984. Held the rank of Airman Basic.
- Has been a member of the BMW Car Club of America since October 1999.
- Has tried approximately 35 cases, serving as sole counsel in the vast majority.
Click here for his full Senate Judiciary Committee questionnaire.
UPDATE: On his Senate Judiciary Committee financial disclosure, Sharpe reported assets valued at $945,800, mostly from real estate and cash on hand and in banks, and a $115,400 mortgage for a net worth of $830,400.
Steptoe & Johnson LLP on Wednesday announced that James Hibey has joined the firm as a partner in the Commercial Litigation Group in the firm’s Washington, D.C. office.
James Hibey (Steptoe & Johnson LLP)
He comes to the firm from Howrey LLP where he was a member of the firm’s Commercial Trial practice and co-chair of the Securities Litigation, Government Enforcement and White Collar Crime practice group.
Before joining Howrey, Hibey worked as an Assistant U.S. Attorney in Washington, D.C., from 1975 to 1980.
Hibey holds a law degree from Georgetown University Law Center and a bachelor’s degree from the University of Notre Dame.
What was going through the mind of Raj Rajaratnam on Wednesday as he heard super banker Lloyd C. Blankfein testify that Rajaratnam’s friend, Rajat K. Gupta, had improperly relayed important and confidential information to Rajaratnam?
We may never know. Rajaratnam once said that risk-taking was the key to his success, and that it “gets my adrenaline pumping.” If so, his adrenaline must have been going full blast as he heard Blankfein, the chief executive of Goldman Sachs, tell a federal court jury in Manhattan about some of the events of the summer and fall of 2008.
In their bulging quiver of evidence, prosecutors have numerous tape-recorded phone calls in which Rajaratnam and other people say things that prosecutors say show Rajaratnam engaging in highly profitable insider trading. A key telephone exchange took place in July 2008, when Gupta, a business consultant then on the Goldman board, talked with Rajaratnam about some Goldman matters.
Did that call violate Goldman’s confidentiality policy?
“Ah…yes,” Blankfein told the prosecutor, according to an account on The New York Times’ website.
Rajaratnam asked Gupta about a rumor that Goldman might be looking for a big commercial bank to gobble up.
“Yeah,” Gupta replied, according to The Times. “This was a big discussion at the board meeting. And you know it was a uh, divided discussion in the board.”
So, Blankfein was asked again, was that chat in violation of Goldman’s confidentiality policy?
“My sense of it, yes,” replied Blankfein, perhaps the government’s most prominent and eagerly awaited witness.
As recounted by The Times, Blankfein recalled that crisis-driven period as “volatile” and “dangerous” and one to make people “nervous.” No argument there.
Gupta has been accused by the Securities and Exchange Commission, in an administrative proceeding, of insider trading. In the Rajaratnam trial, he has been named as a co-conspirator, although he has not been charged.
The government’s theory is that the adrenaline-loving Rajaratnam, billionaire founder of the Galleon Group LLD hedge fund, made some $45 million on illegal trades, using information gleaned from insiders like Gupta (who has termed the SEC’s accusations baseless, as we have reported.)
It will probably be weeks before the U.S. Attorney for the Southern District of New York, Preet Bharara, learns if he has enough evidence to convince the jury of Rajaratnam’s guilt beyond a reasonable doubt and send Rajaratnam away for up to 20 years.
Meanwhile, there’s no doubt at all that the trial offers tantalizing glimpses into the world of high finance and high rollers. Here is some of the information that Gupta had access to — and, by extension, that Rajaratnam had access to, if the prosecution’s theory is upheld.
In a meeting on Sept. 23, 2008, Goldman board members discussed a $5 billion investment in their bank by the investor Warren E. Buffett, perhaps the only person mentioned so far who has more money than the defendant. The Buffett investment was not yet public, but would be hours later.
“Was the Buffett announcement good news or bad news for Goldman?” asked the prosecutor, Andrew Michaelson.
“Good news,” Blankfein replied.
“Big news or small news?”
“Big news.”
Several weeks later, there was another Goldman board meeting. The mood was somber.
“We were losing money,” Blankfein explained.
“What was the significance of that?” Michaelson said.
“We generally make money,” Blankfein said, smiling.
Who said this case is complicated?
Although jockeying over candidates by the state’s congressional delegation has complicated matters, Obama administration officials say the president still intends to make nominations for the four U.S. Attorney positions in Texas.
Responding to concerns raised by Sen. John Cornyn (R-Texas), White House spokesman Reid Cherlin told Main Justice that the administration remains committed to filling the four slots. “This is a priority for us and we hope to nominate candidates soon,” Cherlin said.
With less than two years in his term remaining, President Barack Obama has yet to appoint Senate-confirmed U.S. Attorneys for the state, leaving the top federal prosecuting jobs in one of the most populous states with temporary appointees. He made one U.S. Attorney nomination for Texas so far, but John B. Stevens Jr. last year withdrew his name from consideration for the U.S. Attorney in the Eastern District of Texas after the Senate Judiciary Committee stalled on his confirmation.
Cornyn told reporters this month that he hasn’t heard anything definitive about U.S. Attorney nominations for his state. The senator said filling the U.S. Attorney posts isn’t a priority for the Obama administration.
However, a newspaper reported that some progress is being made. The Justice Department has started to vet candidates to fill the four U.S. Attorney jobs, The Dallas Morning News reported this week. But the list of candidates is still broad, according to the newspaper.
The nomination process in Texas has been messy. Traditionally, home-state senators recommend candidates to the White House — unless both of the state’s senators are of different parties than the president. That is the case in Texas, where Cornyn and Sen. Kay Bailey Hutchison are Republicans. In such cases, the president often relies on House members who are members of his political party.
In 2009, the state’s senators sent Obama one list and the Texas House Democrats sent him another. Since then, the senators and the House Democrats, led by Rep. Lloyd Doggett have battled over who gets to recommend candidates to the White House, providing Obama with only a couple of bipartisan options for the U.S. Attorney posts.
Stevens and Michael McCrum were the only candidates on both the Republican and Democratic lists released to the public and sent to the president in 2009. But McCrum, who was recommended for Western District of Texas U.S. Attorney, withdrew his name from consideration, saying he no longer could wait for the president to send his nomination to the Senate.
In addition to Stevens, the Texas senators suggested the current leader of the Eastern District of Texas U.S. Attorney’s Office, John Malcom Bales, as a candidate for a permanent appointment to that office, which is based in Beaumont. U.S. Magistrate Judge Robert Pitman got the senators’ endorsement too, joining McCrum on their list of candidates for the Western District of Texas U.S. Attorney’s Office, which is based in San Antonio.
The senators also recommended that Obama nominate Assistant U.S. Attorney Kenneth Magidson to lead the Houston-based Southern District of Texas U.S. Attorney’s Office and Assistant U.S. Attorney Sarah Saldana to take the reins of Dallas-based Northern District of Texas U.S. Attorney’s Office.
Doggett’s publicly released list in 2009 did not include any candidates for the Northern and Southern districts. But the congressman said last year that he recommended U.S. Magistrate Judge Jeff Kaplan for Northern District of Texas U.S. Attorney.
Cornyn has been vocal about his support for Saldana, telling The Dallas Morning News last year that he would “go to the mat” for her. Saldana has faced opposition from Rep. Eddie Bernice Johnson (D-Texas) over concerns about the Assistant U.S. Attorney’s successful public corruption prosecution of former Dallas Mayor Pro Tem Don Hill (D) and former state Rep. Terri Hodge (D), according to The Dallas Morning News.
Of the 93 U.S. Attorney posts across the country, 17 remain in office because a replacement has not yet been nominated by Obama or confirmed by the Senate. The president made four U.S. Attorney nominations so far this year. But the Senate Judiciary Committee has yet to consider the nominations.
President George W. Bush had Senate-confirmed U.S. Attorney appointees in place at the four Texas U.S. Attorney’s offices by April 2002, a little more than a year after he took office. His job no doubt was made easier by his having served as the state’s governor, making him familiar with the political landscape.
President Bill Clinton had two Senate-confirmed Texas U.S. Attorney appointees in place less than a year after he became president. But the Eastern District of Texas did not get a Senate-confirmed leader appointed by Clinton until fall 1994, and the Western District of Texas didn’t receive one until November 1997, nearly four years after he took office.
The Texas U.S. Attorney posts have not been held by Senate-confirmed appointees since at least April 2009.
Johnny Sutton, whom Bush appointed in 2001, stepped down as Western District of Texas U.S. Attorney in April 2009. John E. Murphy has led the office since then.
Rebecca A. Gregory, whom Bush appointed in 2007, resigned as Eastern District of Texas U.S. Attorney in April 2009. Bales has headed the office since her departure.
Richard Roper, whom Bush appointed in 2004, stepped down as Northern District of Texas U.S. Attorney in December 2008. James T. Jacks has led the office since then.
Don DeGabrielle, whom Bush appointed in 2006, resigned as Southern District of Texas U.S. Attorney in November 2008. Jose Angel Moreno has headed the office since February 2010.
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Federal prosecutors in Montgomery, Ala., on Tuesday barely escaped sanctions by U.S. Magistrate Judge Wallace Capel Jr., The Birmingham News reported.
Capel had threatened the prosecutors with sanctions if they did not turn over documents related to wiretaps in a bingo vote-buying case to defense attorneys by 5 p.m. on Tuesday. One of the defense attorneys said the prosecutors complied with the judge’s order. Barely.
Defense attorneys for casino owners Milton McGregor and Ronnie Gilley told Capel that prosecutors failed to turn over all documents relevant to the wiretaps, prompting the judge to order the prosecutors to do so or face sanctions, the newspaper reported. Capel said, “This has gone past the point of mistake or anything else.”
McGregor and Gilley along with two state senators, two lobbyists and two others face charges that they tried to buy and sell votes for a gambling bill before Alabama lawmakers last spring. Defense attorney are hoping to get the wiretaps, a key piece of evidence, thrown out.
The defense attorneys claim that the wiretaps were not conducted properly. In addition, they claimed FBI agents took notes while the taping was going on and those had not been turned over, the newspaper reported. Gilley’s attorney Doug Jones said, “I think there are logs. I think there are emails among the agents.”
McGregor’s attorney Joe Espy told the Associated Press that prosecutors emailed him documents shortly before the judge’s deadline.
There is no political motive behind the Department of Justice’s lawsuit on behalf of a Muslim teacher who had to quit her job to go on a pilgrimage to Mecca, said Assistant Attorney General Thomas E. Perez, the head of DOJ’s Civil Rights Division. Rather, he said, the suit is aimed at protecting the principles of religious liberty on which the country was founded.
“This was a profoundly personal request by a person of faith,” Perez said in an interview with The Washington Post. He was referring to Safoorah Khan, 29, who had taught middle school math for nine months in the Chicago suburb of Berkeley when she asked for three weeks off for the pilgrimage.
The school district said no, that it needed Khan for end-of-semester duties. So she quit and went on the pilgrimage anyway, and now the DOJ is suing the school district, accusing it of violating her civil rights by putting forcing her to choose between job and faith.
Perez said the suit, filed in the U.S. District Court for the Northern District of Illinois, in Chicago, is intended to safeguard “the religious liberty that our forefathers came to this country for” and to help stem a “head wind of intolerance” toward Muslims.
But the lawsuit has been greeted with some skepticism since it was filed in December. Berkeley Village President Michael A. Esposito told The Post that the suit is “targeting a small community.”
“The school district just wanted a teacher in the room for those three weeks,” Esposito said, alluding to the stretch in December 2008, when Khan went on her pilgrimage. “They didn’t care if she was a Martian, a Muslim or a Catholic.”
“How come we bow down to certain religious groups?” said Esposito, who described himself as a political independent. “Why don’t we go out of our way for the Baptists or the Jehovah’s Witnesses?”
Michael B. Mukasey, who was Attorney General under President George W. Bush, called the lawsuit “a very dubious judgment and a real legal reach.”
Attorney General Eric Holder has said the Obama administration has said it is committed to protecting the rights of Muslims while being vigilant against terrorism. And just last week, FBI Director Robert Mueller said his agency has a “very good relationship” with Muslim Americans and is trying to reach out to them, as Main Justice reported.
Army officials should have noticed signs of mental problems in Bruce E. Ivins and acted long before the 2001 anthrax attacks, which Ivins planned and executed, according to a new report, the Los Angeles Times reported.
Over a period of several weeks following the Sept. 11, 2001, terrorist attacks, letters that contained anthrax were mailed to several news media offices and two senators. The attacks were responsible for the deaths of five people and sickening 17 others.
In February 2010, the Justice Department, FBI and U.S. Postal Inspection Service announced that the federal government had formally concluded its investigation into the anthrax attacks. The agencies determined that Ivins acted alone in planning and executing the attacks.
Ivins, a senior biodefense researcher at the U.S. Army Medical Research Institute of Infectious Diseases at Fort Detrick, Md., committed suicide on July 29, 2008, less than a week before the FBI declared him to have been the sole perpetrator of the attacks. That assertion has not satisfied a number of critics of the investigation, however.
In the latest report, the panel of behavioral analysts said that Ivins had exhibited alarming behavior indicative of mental problems and that military officials should have noticed and acted on their concerns long before the attacks. The panel concluded that the attacks “could have been anticipated — and prevented.”
The panel concluded that if Army officials had looked into Ivins’ instability, he would have been denied the security clearance that was needed to handle anthrax.
