It’s common for young lawyers to be prosecutors, then become criminal-defense attorneys after they’ve sharpened their skills. Similarly, it’s not uncommon in Washington for lawyers to work for regulatory agencies, then go into private practice and deal with their former employers.
A vivid example of such fence-hopping involves the Securities and Exchange Commission and Citigroup, as David S. Hilzenrath writes in a report for The Washington Post and Bloomberg.
Two years ago, Hilsenrath recounts, the SEC was considering charging Citigroup’s firm’s former chief financial officer with misleading investors by understating his firm’s exposure to subprime mortgages. “To help defuse the situation, Citigroup added to its legal team a criminal defense lawyer named Mark Pomerantz, who had some special qualifications,” Hilsenrath notes.
Special qualifications? Pomerantz was SEC enforcement director Robert Khuzami’s boss when both worked at the Department of Justice, and he had backed Khuzami for a promotion.
“On behalf of Citigroup, Pomerantz wrote to Khuzami in 2010 asking for a meeting,” Hilzenrath writes. According to a newly released report by SEC Inspector General H. David Kotz, “Pomerantz said he wanted to reinforce the point that charging the former executive with fraud ‘would have very large implications for Citigroup,’” Hilzenrath goes on.
In the eventual settlement, Citigroup paid a substantial fine, as did two of its executives, but neither the firm nor the individuals had to admit any wrongdoing.
Kotz rejected any suggestion that Citigroup executives avoided fraud charges as a result of “special access and preferential treatment.” Instead, his office “found that the settlements were part of a negotiation process that involved several members of the Enforcement staff,” Kotz’s report said.
But it might not be a stretch to conclude that the report is a reminder of how close the SEC enforcers can be to their potential adversaries, some of whom used to be on the other side of the fence.
President Barack Obama has nominated Roy Wallace McLeese III, a long-serving attorney in the United States Attorney’s office in Washington, D.C., to serve on the District of Columbia Court of Appeals, the capital’s equivalent of a state supreme court.
The White House announced the President’s decision to name McLeese on Thursday.
“Throughout his career, Roy Wallace McLeese III has shown unwavering integrity and an outstanding commitment to public service,” the President said in a news release. “I am proud to nominate him to serve on the District of Columbia Court of Appeals.”
McLeese is currently head of the appellate division for the U.S. Attorney’s Office in Washington, where he served as a Deputy Chief from 1990 until 2005.
McLeese also served as an assistant to the Solicitor General from 1997 until 1999, and was briefly Acting Deputy Solicitor General.
After graduating from New York University School of Law, McLeese served as a law clerk for Supreme Court Justice Antonin Scalia and while Scalia was a judge on the U.S. Court of Appeals for the District of Columbia Circuit.
If his nomination is approved, McLeese will fill the vacancy left by Judge Vanessa Ruiz, a Clinton appointee who retired in August.
Some of the world’s biggest airlines are able to renegotiate big fines imposed on them by the Department of Justice for price-fixing years ago, Reuters reports.
The airlines, which engaged in price-fixing as their profits were undermined by a slumping economy, have used the latest financial crisis to argue, successfully, that payment schedules for fines could push them into bankruptcy, federal prosecutors told Aruna Viswanatha of Reuters.
“The authorities have responded positively and airlines are finding surprising wiggle room in renegotiating multimillion-dollar fines,” Viswanatha writes. “Some fines have been deferred or the interest charges on them scrapped.”
A former official in the DOJ’s Antitrust Division said, “There is a sensitivity to the consequences for the market of what is in essence a death penalty for a company.” Such renegotiations are rare, and the DOJ is reluctant to discuss them.
“According to antitrust lawyers and court records, among those to benefit have been Korean Air Lines Co. Ltd., Japan Airlines Co. Ltd., Asiana Airlines Inc. and Cargolux Airlines International SA,” Viswanatha reports.
The Justice Department is launching an inquiry into the decision of a Los Angeles suburb to deny a local mosque’s planned expansion.
Federal officials are looking into whether or not Lomita, California city council members violated the Religious Land Use and Institutionalized Persons Act when they rejected the construction plans almost two years ago, according to the Daily Breeze, a local newspaper.
City Attorney Christ Hogin told the newspaper that the investigation started in July.
The city council denied that religion played a role in their decision, which they said was influenced by concerns over traffic and parking.
But the mosque’s supporters say that the city’s planning commission and municipal staff had recommended that the plans — to build a two- story building to replace eight aging buildings on the one acre lot — be approved, and that a study had found the expansion would have no effect on traffic patterns.
The mosque’s supporters contend that anti-Muslim sentiment informed the city council’s decision to reject the proposal.
And when Justice Department officials read a May 2010 Los Angeles Times blog post which reported that members of the Mosque felt discriminated against, they decided to launch their investigation, according to the Daily Breeze.
“I believe the city’s denial of the rezoning has constituted a substantial burden on the mosque community to practice their religion,” said Ameena Qazi, an attorney with the Council on American-Islamic Relations who is representing the mosque.
The Religious Land Use and Institutionalized Persons Act prevents state and local authorities “from imposing a substantial burden on the religious exercise of a person.”
Opponents of the expansion, however, contend that the traffic study that justified the expansion was flawed, and that allowing the mosque to expand would shrink the city’s commercial zones and possibly cause sales tax revenue to decrease.
“It’s a little alarming the federal government would come in and second-guess a land-use decision like this,” Hogin said.
A federal judge delivered a sharp rebuke to the FBI on Thursday, ordering it to pay the legal fees of Muslim activist groups that sued for access to its files, the Associated Press reported.
Judge Cormac J. Carney of the Middle District of California emphasized that the financial sanction was not based on the merits of the Islamic Shura Council of Southern California’s Freedom of Information Act case, but rather to punish a government that chose to lie to its own judicial system. “The Court must impose monetary sanctions to deter the Government from deceiving the Court again,” Carney wrote, giving the group 14 days to provide details of its costs.
The Islamic Shura Council is composed of six Muslim-American community organizations and five community leaders, the A.P. said. It had requested access to all records created since January 2001, “including surveillance, monitoring and other investigations of the council,” the A.P. said.
The judge has been angered by FBI assertions that it had to deceive for national security reasons, as Main Justice reported last April.
“Parties cannot choose when to tell the Court the truth,” Carney wrote on Thursday. “They must be truthful with the Court at all stages of the proceedings if judicial review is to have any real meaning.” The A.P. said that FBI spokeswoman Laura Eimiller declined to comment, noting that the agency does not comment on litigation.
Lawmakers in the House and Senate introduced a bill Thursday that would increase penalties for the sale, manufacture or trafficking of counterfeit pharmaceutical products.
The Counterfeit Drug Penalty Enhancement Act, introduced by Sens. Patrick Leahy (D-Vt.), Charles Grassley (R-Iowa), Michael Bennet (D-Colo.), and Richard Blumenthal (D-Conn.) and Reps. Patrick Meehan (R-Pa.) and Linda Sánchez (D-Calif.), would increase the maximum prison sentence for counterfeiting medicine to 20 years for first-time offenders, and increase the maximum fine to $4 million for first-time offenders, and to $8 million for repeat offenders.
The proposed legislation would also increase the maximum fine to $10 million for any institution guilty of violating the law for the first time, and to $20 million for any institution guilty of repeat offenses.
“While the manufacture and sale of any counterfeit product is a serious crime, counterfeit medication poses a grave danger to public health that warrants a harsher punishment,” said Leahy, the chairman of the Senate Judiciary Committee. “This legislation will raise those penalties to a level that meets the severity of the offense.”
Grassley, the ranking Republican on the Senate Judiciary Committee, described counterfeit medicines as “some of the most profitable commodities for criminal organizations.”
“Purchases of counterfeit drugs by unsuspecting customers are growing at alarming rates, especially over the internet,” he said.
Reports indicate that counterfeit drugs cause 100,000 deaths around the world annually, and account for an estimated $75 billion in yearly revenue for criminal organizations, according to Leahy’s office.
“The information provided thus far is incomplete and does not enable us to determine that the proposed changes have neither the purpose nor will have the effect of denying or abridging the right to vote on account of race, color, or membership in a language minority group, as required under Section 5,” reads the letter, from the Voting Section chief T. Christian Herren.
“Although you did not indicate a date when this information would be available, you noted that the state will provide the results of its analysis as expeditiously as possible,’ Herren added.
The bill in question prohibits Texans from voting unless they show a government-issued ID. The goal is to crack down on voter fraud.
The Texas Democratic Party staunchly opposes the bill, as do civil rights groups such as the American Civil Liberties Union and the Advancement Project. The groups argued in a September letter to the DOJ that voter fraud is not a major issue and the law will only discriminate against minorities.
The back-and-forth has been ongoing since July, when Texas asked the DOJ for preclearance for the law. Herren’s letter, however, points out that in September, the DOJ said it needed more information about the racial breakdown of registered voters who do not have a state-issued ID. The state of Texas maintains it does not collect racial information on voter applications.
“The racial breakdown of voters data doesn’t exist in Texas,” said Rich Parsons, communications director for the office of Secretary of State.
According to Parsons, however, the state is in the process of complying with the DOJ’s latest request.
“We will provide them the data,” said Parsons, adding, “but it will be unreliable data.” He went on to say that it is too early to speculate on whether or not the January 1 implementation date will definitely be postponed.
Texas Governor Rick Perry has previously stated support for the bill.
“Oops!” is a word you don’t want to hear from an airline pilot, a surgeon or, in this case, from law enforcement officers, as in “FBI Raids Wrong House in Florida.”
FBI agents barged into the wrong home in Delray Beach in their search for a teen who allegedly concocted a phony kidnapping plot to extort money from his parents, Allan Lengel reports on his Tickle the Wire blog.
Lengel cites an account on Station WPBF in West Palm Beach in which Naomi Palmer of Delray Beach told of being asleep on the sofa Tuesday morning when she heard commotion at the door and people yelling. “They started hollering FBI, FBI,” Palmer says. “They came in with high-powered rifles.” Palmer’s neighbor and mother-in-law, Jewel D. Jones, was similarly rousted.
Small wonder that the FBI and local police were acting with urgency. They were looking for a 17-year-old Orlando youth who called his father and claimed (falsely, it turned out) that he had been kidnapped, and that the price of his freedom was $50,000.
Sgt. Nicole Guerriero of the Delray Beach police said authorities were following leads.”Sometimes we get information we have to follow up on, especially in a case like this when someone is stating that their life is in danger and they’re being kidnapped,” she said. “Unfortunately, we don’t always get the right address.” (Emphasis added.)
Perhaps Guerriero should consider her remarks more carefully. And perhaps the 17-year-old should be grounded — for life.
Attorney General Eric Holder has been traveling throughout the Caribbean this week for a series of talks on regional cooperation in law enforcement–a visit that will conclude with an Organization of American States conference in Port of Spain, Trinidad on Thursday and Friday.
Prior to the OAS conference, Holder held bilateral talks in the Dominican Republic and Barbados on Monday and Tuesday, and meetings with Trinidadian officials on Wednesday.
The agenda at the OAS conference, the Third Meeting of Ministers Responsible for Public Security in the Americas, is primarily focused on combating transnational crime, according to the Justice Department.
The conference will specifically focus on “modernising police institutions within a democratic framework, supporting police professionalisation and training, strengthening co-operation on police information systems and enhanced use of technology” according to the Trinidad Guardian.
Holder also held talks with Trinidad and Tobago Prime Minister Kamla Persad Bissessar, according to the Guardian. The two reaffirmed a commitment to collaborate on counterterrorism, according to The Gleaner, a Jamaican news website.
Holder also mentioned to reporters that he was satisfied with the extradition process between the two countries, in response to a question about the trial of Steve Ferguson and Ishwar Galbaransingh, two businessmen on trial in Trinidad, but who are also facing indictments in the U.S. for allegedly violating the Proceeds of Crime Act. Their extradition was overturned by a Trinidadian judge last week, the Trinidad and Tobago Newsday reported.
Holder also visited Barbados — the birthplace of his father and four grandparents — where he met the country’s Prime Minister and Attorney General, Fruendel Stuart and Adriel Brathwaite.
Early in the week, the attorney general was in Santo Domingo, capital of the Dominican Republic, where he attended a ministerial conference on international organized crime.
Holder also praised Dominican officials for ongoing collaborative efforts, citing their role in helping American officials to recover roughly $37 million worth of local assets owned by three Cuban brothers found to have committed Medicare fraud worth around $80 million. According to the Miami Herald, court documents show that the brothers, Carlos, Jose and Luis Benitez, used the stolen public money to buy “Mediterranean-style homes, apartments, hotels, boats, a helicopter, even a water park — all in the resort area of Bavaro, Dominican Republic.”
Holder announced that the United States will be sharing $7.5 million of the assets recovered in the Dominican Republic with the office of Dominican Prosecutor General Radhaméz Jiménez Peña.
Rep. Darrell Issa (R-Calif.), chairman of the House Oversight Committee, which is investigating the controversial Operation Fast and Furious gun operation, was critical of the week-long trip.
“One would think that agreements could be signed on a more abbreviated schedule that saves the attorney general time he continually indicates he doesn’t have, as well as taxpayer money,” according to The Daily Beast.
But Holder’s representatives defended the trip. An aide traveling with the Attorney General provided the Daily Beast with his itinerary and told the website that Holder ate at a diminutive fish restaurant in the Barbados on Tuesday night, where waiters were forced to take measures to keep the deck from flooding as a monsoon approached.
“We’re not going to the tourist parts of these places,” another Justice Department official on the trip said.
A former aide to Ponzi schemer Bernard L. Madoff is expected to plead guilty in Manhattan to a conspiracy charge on Monday in what could be a signal that prosecutors have a new investigative avenue nearly three years after Madoff’s huge swindle came to light, The New York Times reported.
David L. Kugel, who joined the Madoff firm as a trader in 1970, is to enter his guilty plea and continue to cooperate with investigators, according to a letter from prosecutors on Wednesday to U.S. Judge Laura Taylor Swain of the Southern District of New York. Kugel would be the fifth person, including Madoff himself, to plead guilty in the multibillion-dollar swindle.
Madoff, who pleaded guilty and was sentenced to 150 years in prison, has maintained that he began his scheme in 1992 and that he acted alone. In recent weeks, there have been reports that charges against any of his relatives appear unlikely (see recent Main Justice account). But, given how far back Kugel’s relationship with the firm began, his guilty plea could give prosecutors a chance to challenge Madoff’s version of events, The Times said.
