Online poker devotees who were turned away from the table, figuratively speaking, because of a Department of Justice crackdown last week can at least get their money out of their online accounts, Preet Bharara, the U.S. Attorney for the Southern District of New York, announced on Wednesday.
Full Tilt Poker and PokerStars have reached agreement with the SDNY whereby U.S. players can access their accounts, Bharara’s office said. The players had been shut out since the poker websites were taken down when the Department of Justice accused the poker outfits of fraud and other charges and moved to seize their assets.
“No individual player accounts were ever frozen or restrained, and each implicated poker company has at all times been free to reimburse any player’s deposited funds,” Bharara said. “This office expects the companies to return the money that U.S. players entrusted to them, and we will work with the poker companies to facilitate the return of funds to players.”
A third online site, Absolute Poker, has yet to reach accord with the DOJ.
Those who enjoyed online poker were furious at the DOJ’s action, as Main Justice reported earlier this week. Comments ranged from vulgar to unprintable. (For a more detailed update, check out The Am Law Daily website.)
The Justice Department knew about a controversial gun smuggling operation and failed to stop it, House Oversight and Government Reform Chairman Darrell Issa (R-Calif.) charged Wednesday, threatening to hold DOJ officials in contempt of Congress if they don’t produce documents he has subpoenaed.
Issa said e-mails and reports he obtained indicate that DOJ officials knew about “Project Gunrunner” and “Operation Fast and Furious,” which allowed guns to fall into the hands of Mexican drug cartels in an effort to track them. A letter from Issa Wednesday to Kenneth Melson, the acting director of the Bureau of Alcohol, Tobacco and Firearms, included e-mails last year from ATF Phoenix Supervisor David Voth about the program and reports related to suspicious gun buyers and the firearms they bought.
The Republican House member accused Melson of stonewalling his probe and threatened to initiate contempt of Congress proceedings against him if documents relating to the operation were not sent to him.
“The Department’s internal policy to withhold documents from what it labels pending criminal investigations may not deprive Congress from obtaining those documents if they are pertinent to a congressional investigation – particularly in a matter involving allegations that the reckless and inappropriate decisions by top Justice Department officials may have contributed to the deaths of U.S. and Mexican citizens,” Issa wrote.
An ATF spokeswoman declined to comment to Main Justice. A DOJ spokeswoman didn’t immediately respond to a request for comment. Committee ranking Democrat Elijah Cummings (D-Md.) also had no immediate comment.
“It is nearly unfathomable that our government would allow straw purchasers to illegally acquire automatic weapons and transport them into Mexico, in furtherance of an ATF-led and – inspired investigation,” Issa wrote in his letter to Melson. “As I understand Department of Justice operations, such programs would require the approval of top officials.”
President Barack Obama has said neither he nor Holder consented to “Operation Fast and Furious.” Holder told Congress in March that he informed DOJ officials that allowing firearms to “walk” is unacceptable. DOJ officials have said the Department’s Office of Inspector General is investigating the ATF gun smuggling policies.
The DOJ permitted the committee to review four documents related to the program at a private meeting at Department headquarters prior to the subpoena deadline. Issa was not satisfied.
“These documents were quite general and largely unhelpful as none of them directly pertain to Operation Fast and Furious,” Issa wrote in the letter to Melson. “This is not surprising considering that the Department of Justice believes it is ‘not in a position to disclose such documents, nor can [DOJ] confirm or deny the existence of records in [its] ongoing investigative files.’ ” (Issa quoted an April 8 letter he received from Assistant Attorney General Ronald Weich of the DOJ Office of Legislative Affairs.)
Issa wrote that Weich made “vague assertions” in an April 13 letter to Issa that explained why DOJ was not turning over subpoenaed documents. But the Assistant Attorney General did not make an executive privilege claim that would allow the DOJ to refuse to comply with the subpoena.
The chairman subpoenaed DOJ for records about the murder of U.S. Border Patrol Agent Brian Terry, whose body was found near two firearms traced to the program. ATF documents obtained by his committee and included in the letter to Melson show Jaime Avila, who has been charged with buying firearms found at the scene of Terry’s December murder, bought two AK-47 rifles in early 2010 that were recovered in the investigation of the agent’s death.
Sen. Charles Grassley (R-Iowa), who is also probing the program, has asked whether ATF operations led to the shooting of Immigration and Customs Enforcement Special Agent Jaime Zapata, who was killed in Mexico in February. Agent Victor Avila Jr., who was with Zapata during the shooting, was wounded.
Last week, Grassley released e-mails that show that Voth tried to put a gun shop owner at ease over the dealer’s participation in the program and arranged meetings to discuss his worries.
The ATF program made it possible for suspected smugglers to buy 1,765 firearms, 797 of which were recovered in Mexico and the United States after they were used in crimes. Of those crime guns, 195 were recovered in Mexico.
UPDATE
Cummings on Wednesday expressed frustration with Issa’s threat to hold DOJ officials in contempt of Congress if they don’t produce documents he has subpoenaed.
“Our Committee has a responsibility to investigate allegations of waste, fraud and abuse,” Cummings said in a statement. “However, despite my repeated requests, Chairman Issa has refused to meet with the Department of Justice to ensure that his actions do not compromise ongoing investigations and prosecutions, including a trial of 20 individuals that is scheduled to begin in June.”
A long feud between a former Mississippi Supreme Court justice and a former U.S. Attorney for the Southern District of the state shows no sign of ending, with the U.S. Court of Appeals for the 5th Circuit providing the latest development, this one in favor of the ex-judge.
The Circuit ruled that the former U.S. Attorney, Dunn Lampton, does not enjoy immunity from being sued by the ex-judge, Oliver Diaz Jr. In so ruling on Monday, the appellate court upheld the conclusion of a federal district judge, who ruled in Diaz’s favor almost a year ago (see Main Justice’s report.)
Diaz, who had served in the Mississippi House of Representatives as a Republican, was appointed by Democratic Gov. Ronnie Musgrove in 2000 to fill an unexpired term on the state’s high court. He later ran for election and won a full eight-year term on the court. But in 2003 Diaz was indicted on bribery and mail fraud charges in a case prosecuted by Lampton.
Diaz was acquitted in 2005. Soon afterward, he was indicted on tax-evasion charges. He beat those charges also, although his wife, Jennifer, pleaded guilty to tax charges.
Lampton then filed a complaint against Diaz with the Mississippi Commission on Judicial Performance, which investigates claims of judicial misconduct. As part of his complaint, Lampton submitted some of the Diaz couple’s tax information, prompting the couple to sue Lampton for invasion of privacy.
Lampton contended he should enjoy immunity because he was fulfilling his duties as prosecutor. The district court rejected that contention, and so did the Circuit Court. In its opinion, it said Lampton was merely a “complaining witness” before the judicial commission, not a prosecutor. Furthermore, the Circuit said, “A prosecutor does not have carte blanche to do as he pleases with the information he can access.”
Saying the Justice Department knew about a controversial gun smuggling operation and failed to stop it, House Oversight and Government Reform Chairman Darrell Issa (R-Calif.) threatened Wednesday to try to hold DOJ officials in contempt of Congress if they don’t produce documents he has subpoenaed.
Issa said he has documents indicating that DOJ officials knew about “Project Gunrunner” and “Operation Fast and Furious.” He accused Kenneth Melson, the acting director of the Bureau of Alcohol, Tobacco and Firearms of stonewalling his probe and threatened to initiate contempt of Congress proceedings against him if documents relating to the operation were not sent to him. Main Justice will be updating this story.
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Although she is only seven months into a 37-month prison sentence, Monica Conyers has asked a federal judge if she can serve out the rest of her time from home, the Detroit Free Press reported.
Conyers, the wife of Rep. John Conyers (D-Mich.) the ranking Democrat on the House Judiciary Committee, pleaded guilty to accepting bribes in 2009 and was sentenced to 37-months to be served starting in September of 2010 at Alderson Federal Prison Camp in West Virginia.
Recently she claimed that her sentence was unfair and the judge did not take into account her “age, education, vocational skill, employment record, family ties and responsibilities.”
According to experts who spoke with the Detroit Free Press, Conyers is facing an uphill battle in her fight for home confinement.
In the meantime, she will continue to serve out her sentence at the prison which is known as ‘Camp Cupcake’ by the locals due to its comfort and settings.
Three people have been arrested on charges relating to the killing of Deputy U.S. Marshal Derek Hotsinpiller and injuries to two other U.S. Marshalls, according to Department of Justice officials.
Sherry Lou Smith, Anthony Lambert, and Cassandra Smith, all residents of West Virginia, have been charged in a 14-count indictment that includes conspiracy to obstruct justice, obstruction of justice, and making false statements to law enforcement officers.
On Feb. 16, Hotsinpiller along with several other Marshals and state troopers went to Elkins, W.V., to serve Charles Edward Smith a warrant for failing to appear in court for cocaine and firearm charges. When they arrived, the officers knocked and after no one answered, broke into the home. At that point Charles Smith opened fire and killed Hotsinpiller and was then shot dead himself.
The indictment alleges that the three defendants “assisted a fugitive from March 22, 2010, and continuing until Feb. 16, 2011, in order to hinder and prevent his apprehension,” accordingto a DOJ statement.
With the Justice Department under scrutiny for not prosecuting many prominent players in the 2008 financial industry collapse, Criminal Division chief Lanny Breuer is trumpeting a major win against a former mortgage lending executive found guilty in a $2.9 billion fraud.
Lee Farkas
Moments after a federal jury in Alexandria, Va., on Tuesday returned a guilty verdict against Lee Farkas, the former chairman of Taylor, Bean & Whitaker Mortgage Corp., Breuer was on a conference call with reporters.
“There’s no question that it is very momentous and a very significant case,” the assistant attorney general said on the call. He characterized Taylor Bean as a “major, major player in this industry” and called Farkas ”one of the masterminds in one of the largest bank frauds in history.”
Farkas’s “shockingly brazen scheme poured fuel on the fire of the financial crisis,” Breuer added. First Assistant Dana Boente of the U.S. Attorney’s office for the Eastern District of Virginia was also on the call.
“Finally, a big fish,” read a headline in an American Bar Association publication after the verdict. “It is one of the few successful prosecutions to come out of the financial crisis,” intoned the New York Times in its report.
Lanny Breuer (Getty Images)
Breuer had made a clear how important the case was to the department: He showed up in court to watch proceedings in the 6th day of the 10-day trial. He “remained as a spectator” for most of key testimony by Taylor Bean’s former chief executive, Paul Allen, who said Farkas took funds from a unit to hide shortfalls at the lender, according to Bloomberg.
The decade-long fraud scheme led to Taylor Bean’s demise and the collapse of a top-50 U.S. bank, Colonial BancGroup Inc’s Colonial Bank, Bloomberg reported. Farkas was also accused of getting Colonial to apply for $570 million in federal funds through the Troubled Asset Relief Program, but the bailout program ultimately didn’t give the bank the money.
Prosecutors alleged that Farkas used $20 million in illicit funds from the scheme to buy a private jet, several homes and a vintage cars. Patrick Stokes, a deputy chief in the Justice Department’s Criminal Fraud Section, gave the government’s rebuttal argument, and EDVA Assistant U.S. Attorney Charles Connolly handled closing.
U.S. District Judge Leonie Brinkema ordered Farkas into federal custody immediately after the verdict, in which he was found guilty on 14 counts of conspiracy and bank, wire and securities fraud. The Associated Press called the ordering of Farkas into custody ”a relatively unusual step” before sentencing, scheduled for July 1. Farkas faces life in prison.
The jury deliberated part of Monday and Tuesday before returning its verdict.
Allen, 55, the former Taylor Bean CEO, pleaded guilty April 1 to one count of conspiracy to commit bank and wire fraud and one count of making false statements. Allen faces up to 10 years in prison. His sentencing is slated for June 21.
In all, the department won seven convictions in the case, including of Farkas.
Closing arguments are to begin on Wednesday in the conspiracy and securities-fraud trial of Raj Rajaratnam, who opted not to take the stand in his own defense.
“The defense rests,” John Dowd, Rajaratnam’s chief lawyer, told the jury on Monday after the defense team had spent about a week trying to undercut a prosecution case based on the testimony of numerous witnesses who have pleaded guilty in hope of leniency, plus recorded telephone conversations in which Rajaratnam seems to be awfully well connected to who’s buying and selling what on Wall Street.
Well connected and well informed, yes, but not guilty of insider trading, the defense has tried to convince the jurors in the Southern District of New York. The defense has argued, basically, that the information Rajaratnam benefited from was out there, one way or another, and was not obtained illegally.
So, why didn’t Rajaratnam get on the stand before the jurors and Judge Richard J. Holwell and stick up for himself? Indeed, Ashby Jones notes on The Wall Street Journal’s Law Blog that Rajaratnam had told some friends that he might do just that.
Which would have been a very bad idea, in the view of one expert not connected to the case.
“When you’re caught on a wiretap making powerfully incriminating statements, it’s very difficult to testify,” said Anthony Barkow, a former prosecutor in Manhattan who runs a center on criminal law at New York University, told Bloomberg News. “He can try to challenge the tapes by saying he meant something else, but that usually doesn’t work.”
Judges routinely tell jurors that the entire burden of proof is on the prosecution, and that they should not assume anything bad about the defendant just because he doesn’t take the stand. Of course, it’s impossible to tell whether jurors are affected, subliminally or otherwise, by a defendant’s decision to remain silent. In some cases, no doubt, jurors want to hear the accused say he didn’t do it.
But Barkow says that that would not have been a good idea for the billionaire Rajaratnam, founder of the Galleon Group LLC hedge fund, who is accused of reaping some $64 million in illicit profits.
“When you’re caught on tape saying something relatively unambiguous, you can’t risk compounding an already bad situation by making the jury think that you’re lying to them by offering an implausible explanation,” Barkow told Bloomberg. “It’s very, very dangerous for a defendant to testify when there’s ammunition like a wiretap.”
The defense tried to defuse some of that ammunition by calling business professor Gregg A. Jarrell, as The New York Times noted. Jarrell took the jurors through a long, long series of trades, asserting that as a whole they showed that Rajaratnam acted legitimately. (Prosecutors tried to convince jurors that Jarrell didn’t know what he was talking about and should stay in the Groves of Academe rather than venture into a real-world courtroom.)
The Times estimated that the defense spent almost $1 million just on the research that Jarrell and his team performed — a reminder that the total bill for a defense team that has been in court for six weeks will surely be stratospheric.
Once the closing arguments are complete, Holwell will instruct the jurors, who will determine whether Rajaratnam walks free, or walks into prison, not to emerge for a couple of decades. So while the defense team has rested, it’s inconceivable that the defendant is relaxing.
The law protects Secret Service agents when they have to make split-second decisions protecting a president or vice president, the Department of Justice is arguing on behalf of two agents being sued in connection with an incident involving former Vice President Dick Cheney.
The incident occurred in 2006 near Denver, when Steven Howards approached Cheney at a mall to protest the Bush administration’s Iraq policy, apparently touching the vice president’s shoulder. He was quickly arrested by agents Virgil D. “Gus” Reichle Jr. and Dan Doyle, as Allen Lengel recounts on his Tickle the Wire blog.
Howards has contended he was arrested in retaliation. Federal authorities never charged him, and the state dropped charges. A three-panel of the U.S. Court of Appeals for the 10th Circuit ruled that Howards could sue the agents on First Amendment grounds. Now, the DOJ is asking the full 10th Circuit to overturn the panel’s ruling.
