The number of federal criminal cases filed in fiscal 2009 surged to its highest level since 1932, with immigration, drug and fraud cases seeing the biggest increases, according to a news release by the Administrative Office of the U.S. Courts.

The annual report, which details federal filings and caseloads for the 12-month period between Oct. 1, 2008, and Sept. 30, 2009, was released Tuesday, the same day as the Judicial Conference of the United States met for its biannual meeting in Washington D.C.

According to the 38-page summary of the report, the number of criminal federal cases filed in U.S. District Courts in fiscal 2009 jumped 8 percent to nearly 77,000, up from about 71,000 the year before. That number represents a 22 percent increase since 2000.

The areas that saw the largest increases include immigration, fraud, marijuana, traffic and sex offenses. (Appendix with offenses by category here)

Immigration offenses topped the list with a 21 percent increase in filings — from 21,313 in fiscal 2008 to 25,804 in fiscal 2009. Of the immigration offenses, 80 percent of the cases dealt with improper re-entry by illegal immigrants.

Drug offenses, the second large category, saw a minor increase overall. But offenses involving marijuana increased 22 percent, from 4,418 to 5,411. The rise in drug cases occurred mainly in several districts along the Southwest border with the District of Arizona, Southern District of California and Southern District of Texas all seeing a surge in drug case filings.

Fraud filings also reached a new high in fiscal 2009, with more than 8,000 new cases — an 8 percent increase over fiscal 2008 — making it the third-largest category of offenses, after immigration and drug-related offenses.

The Justice Department’s ever more complex national security and financial crime caseload has been a boon for an often-overlooked cog in the federal legal system: the expert witness.

The department has asked Congress for more than $250 million in fiscal 2011, anticipating a spike in demand for witnesses who can distill eye-glazing arcana into something more or less accessible to the average person (or judge), according to budget documents recently posted on the department’s Web site. The funds would also be used pay the fees of physicians and psychiatrists who examine criminal defendants to determine their fitness to stand trial.

The overall funding level for witness fees and protection has remained flat, at about $168 million, since fiscal 2006, with the department using direct appropriations and carry-over balances to cover rising costs. Those carry-over balances are approaching zero, and the department says it needs an additional $92 million to pay experts on range of topics, from spent nuclear fuel to mortgage lending.

About 70 percent of the expert witnesses used by the department in 2009 were physicians, psychiatrists, appraisers, engineers or economists, according to the department. Their rates vary, and compensation is negotiated between the expert witness and the Justice Department lawyer who selects them.

Government lawyers must interview at least three potential expert witnesses before making a selection; there are no caps on costs or required minimums, a Justice official said. Each Justice Department component and U.S. Attorney’s office has a designated official who approves expert witness contracts.

“Because of that decision, the federal government may be made liable for billions of dollars in damage claims; therefore, a significant amount of expert witness resources will be needed to accurately and fairly access the thousands of claims filed in this case,” the budget document states.

Expert witnesses are also playing a key role in assessing the value of tribal lands, as the Civil Division lawyers defend the Interior Department in dozens of lawsuits alleging it mismanaged Indian funds held in trust. And the department said more expert witnesses will be needed to give testimony in trials over the storage of spent nuclear fuels, and to help defend against a “staggering increase” in claims in the Vaccine Program.

In the U.S. Attorneys’ offices, demand for expert witnesses is at least as high, particularly in mortgage fraud and tax shelter cases. The offices spent $47 million on expert witnesses in fiscal 2009, as opposed to $22 million in fiscal 2005 — a 114 percent increase, according to department figures.

Expert services companies are taking note. Ken Yormark, managing director at LECG Corp. and head of the forensic accounting practice in New York, said the company is working to get on the federal government’s vendor list.

Still, greater demand for expert witnesses in the public sector inevitably leads to greater demand for expert witnesses in the private sector. Yormark said LECG, whose clients are typically from the latter, is ”definitely seeing more activity in the market place.”

“When the bell rings and companies need assistance, they have to call on experts like us to help them,” Yormark said.

The Senate today approved an amendment to the health care overhaul bill that includes provisions to fight fraud.

Patrick Leahy (Getty Images)

The Senate voted 60-39 on a manager’s amendment from Senate Majority Leader Harry Reid (D-Nev.) that would incorporate elements of the Health Care Fraud Enforcement Act into the health care bill. Sen Ted Kaufman (D-Del.), a Judiciary Committee member, introduced the fraud legislation as a stand-alone bill in October.

Sen. Patrick Leahy (D-Vt.), a co-sponsor of the fraud bill, said in a floor statement yesterday that health care scammers have driven up the cost of medical care. The Judiciary Committee chairman said the manager’s amendment gives prosecutors the resources needed to effectively combat health care fraud.

“These changes will strengthen our ability to crack down on fraud and will ultimately result in significant savings that will make health care more efficient and more affordable,” Leahy said.

Here are some of the key provisions:

– Increased penalties in federal sentencing guidelines.  “Despite the enormous losses in many health care fraud cases, offenders often receive shorter sentences than other white collar criminals,” Leahy said. He added: “By increasing the federal sentencing guidelines for health care fraud offenses, we send a clear message that those who steal from the nation’s health care system will face swift prosecution and substantial punishment.”

– Anti-kickback statute changes. “The manager’s amendment also includes our provision amending the anti-kickback statute to ensure that all claims resulting from illegal kickbacks are considered false claims for the purpose of civil action under the False Claims Act, even when the claims are not submitted directly by the wrongdoers themselves,” Leahy said. “All too often, health care providers secure business by paying illegal kickbacks, which needlessly increases health care risks and costs. This change will help ensure that the government is able to recoup from wrongdoers the losses resulting from these kickbacks.”

– Limited Justice Department subpoena powers for civil rights probes int0 certain medical institutions. “This provision allows the government to more effectively investigate conditions in publicly operated institutions, such as nursing homes, mental health institutions, and residential schools for children with disabilities, where there have been allegations of civil rights violations,” Leahy said.

We reported in October that Assistant Attorney General Tony West urged members of the Senate Judiciary Committee to approve health care fraud legislation.

In May, the Justice and Health and Human Services departments launched the Health Care Fraud Prevention and Enforcement Action Team to fight Medicare and Medicaid fraud.

A former office manager for the late Sen. Edward Kennedy (D-Mass.) allegedly defrauded the Senate of more than $75,000, according to a six-count indictment handed down today by a federal grand jury in Washington.

Ngozi T. Pole is charged with repeatedly filing forms between 2003 and 2007 that caused the Senate to give him bigger bonus and salary payments than were endorsed by Kennedy or his chief of staff, according to the indictment. As office manager, he regularly handled salary and bonus transactions between the Kennedy office and Senate Disbursing Office, the indictment said.

The defendant hid the excess payments from his superiors, according to the indictment. The Kennedy office is fully cooperating with the probe into Pole, according to a Justice Department news release.

Pole faces up to 110 years in prison and a fine that could reach $1.5 million if he is convicted on the five wire fraud charges and the theft of government property charge.

Trial attorneys M. Kendall Day and Ethan H. Levisohn of the DOJ Criminal Division Public Integrity Section are prosecuting the case.

 

Patrick Fitzgerald (DOJ)

The Supreme Court’s decision last month to review the 2007 conviction of former newspaper mogul Conrad Black could lead to curtailing the Justice Department’s use of “honest services” charges in corruption cases, the National Law Journal reports. Black, who controlled Hollinger International, the company that owned the Chicago Sun Times among other publications, was convicted in 2007 of diverting corporate funds to his own pockets. In other words, Black wasn’t “honestly serving” the company’s shareholders, a jury found.

 

“Honest services” charges have been used to send ex-lobbyist Jack Abramoff and his associates to prison.

But the NLJ says U.S. Attorney Patrick Fitzgerald in Chicago and his prosecutors have also made liberal use of the section of the federal anti-fraud statute.  Increasingly, the charges have been used not just to bolster cases, but also as the centerpiece of cases, the NLJ says. The suggestion here is that Fitzgerald is overusing the statute, stretching it to a fits-any-size charge.

Here are the statistics, according to the NLJ:  U.S. Attorney offices have used “honest services” fraud as the lead charge against 79 defendants in fiscal 2007, up from 28 in 2000.