The National Attorneys General Training & Research Institute

The National Attorneys General Training & Research Institute The National Attorneys General Training & Research Institute

CEPI Newsletter December 2017

This monthly compendium of news reports about corruption and ethics issues is brought to you by the Center for Ethics and Public Integrity (CEPI). Neither the National Association of Attorneys General nor the National Attorneys General Training & Research Institute express a view as to the accuracy of news accounts or affirm any position taken by the authors of the hyperlinked articles.

Cases

Birmingham Water Works Chair, Others Charged in Corruption Probe: The Alabama Attorney General’s Office filed an indictment that charges the chairwoman of the Birmingham Water Works Board, a former engineering company vice president, and the mayor of Mount Vernon with violating Alabama ethics laws. Chairwoman Sherry Lewis, former vice president Jerry Jones, and Mayor Terry L. Williams—who also owns an LLP that was implicated in the scheme—are alleged to have funneled public money to Lewis using the businesses owned by Jones and Williams. The Federal Bureau of Investigation assisted the Attorney General’s Office.

Former Charter School Principal Faces Theft Charges: Laara Allbrett, the former principal of a charter school in Hawaii, has been charged with stealing money from the now-shuttered school. The Hawaii Attorney General’s Office brought the case, which followed the revocation of the school’s charter in the spring of 2015 after the school racked up hundreds of thousands of dollars in debt.

Former Sen. Phil Griego Guilty on Five Counts in Corruption Trial: Former New Mexico State Senator Phil Griego was convicted of two counts of violating the ethical principles of public service, one count of bribery, one count of fraud and one count of unlawful interest in a public contract. Griego, who was prosecuted by the New Mexico Attorney General’s Office, used his elected position to push through the sale of a state-owned building that garnered him $50,000 in real estate agent’s fees—an expected bounty that he concealed from his fellow lawmakers when he encouraged them to support the deal.

JFK Exec Accepted More than $1.3 Million in Bribes, Schneiderman Says: An executive at New York’s John F. Kennedy Airport has pled guilty to accepting bribes worth more than $1.3 million. Edward J. Paquette, the former executive director of the Terminal One Group Association, used his position to dole out contracts to catering, transportation, and aircraft servicing firms that bribed him. With Paquette’s conviction, which included $2 million in civil claims, the New York Attorney General’s Office has garnered $15 million in penalties and restitution in a multi-defendant investigation it dubbed “Operation Greased Runway.”

John Young Found Guilty in Forged-Will Case: Texas criminal defense attorney John Stacy Young was convicted of conspiring with a bail bondsman to forge Young’s client’s will so that Young would inherit an $8 million estate. That client, who was facing child pornography charges, was with the bail bondsman when he died. Young and the bondsman were charged by the Texas Attorney General’s Office.

Miami Lawmaker to Resign, Plead Guilty in Criminal Case Over Residency: Florida State Representative Daisy Baez has resigned her Florida House seat and pled guilty to perjury for lying in connection with a probe to determine if she actually resided in the district that she represented. Baez will be required to serve a one year term of probation, pay a $1,000 fine, and take an ethics course. The case was brought by the Miami-Dade State Attorney’s Office.

Public Corruption in Louisiana 'Can't Get Much Worse,' Says Outgoing FBI New Orleans Director: The outgoing Federal Bureau of Investigation Special Agent in Charge in New Orleans has criticized Louisiana’s “extremely unacceptable” amount of corruption, comparing it unfavorably with Rhode Island and other states where he worked for the FBI. He suggests that the imposition of term limits would help reduce the misuse of government power.

New York Police Officers Facing Rape Charges Quit the Force: Two New York City Police Departmentofficers have quit prior to facing an internal trial about their refusal to answer questions about allegations they raped an 18-year old woman they had arrested. The Brooklyn District Attorney’s Office has charged the officers, Edward Martins and Richard Hall, in a 50-count indictment with rape, kidnapping, and official misconduct.

‘Fat Leonard’ Probe Expands to Ensnare More Than 60 Admirals: The U.S. Navy is investigating 60 current and former admirals, among 440 total active-duty and retired personnel, who were connected to corrupt contractor Leonard Francis, a/k/a “Fat Leonard.” The U.S. Department of Justice has charged 28 people and provided dossiers of individuals who they do not intend to prosecute to the Navy, as those individuals may have committed offenses under the military justice system. Leonard is alleged to have paid bribes, primarily to officers who aided him in securing expensive government contacts.

McDonnell

Two high-profile federal cases—separated only by the Hudson River, and described below—resulted in hung juries on November 16, 2017. Articles in the The New York Times, The New York Post, The New York Daily News, and The Atlantic have cited the McDonnell decision as one reason for the mistrials. These cases, and recent release of former U.S. Congressman William Jefferson, also described below, have prompted commentators to call for amending federal law.

Corruption Case Against Senator Menendez Ends in Mistrial: A federal judge has declared a hung jury in the corruption trial against Senator Robert Menendez and Dr. Solomon Melgen. Melgen, an ophthalmologist, provided gifts, political contributions, and trips to Menendez—who, in turn, advocated for various positions that were beneficial to Melgen. It is unclear whether the defendants will be retried.

Mistrial Declared For Norman Seabrook, Ex-Corrections Union Head: A hung jury was declared after three days of deliberation in the federal corruption trial of former head of the New York City Correction Officers Union, Norman Seabrook, and hedge fund manager Murray Huberfield. Huberfield is alleged to have paid Seabrook a $60,000 bribe to ensure that $20 million of the corrections union’s pension fund was placed with Huberfield’s company. The U.S. Attorney’s Office for the Southern District of New York has indicated that it will retry the case.

Former Congressman William Jefferson Goes Free, Thanks to Supreme Court Ruling In McDonnell Case: Former Louisiana Congressman William Jefferson—who hid $90,000 in cash in his freezer as part of a long-running bribery scheme—has been released from prison after serving less than half of his 13-year prison sentence. In October, the federal judge overseeing his case vacated all but three convictions against Jefferson, in light of McDonnell. The judge recently vacated another count that charged Jefferson with racketeering, which carried a sentence of up to 20 years. Jefferson’s two remaining charges, which related to bribery of a foreign official—and survived McDonnell—had statutory maximum sentences of five years each. The government and Jefferson reached an agreement to avoid another trial: the government would keep the $189,000 that had been forfeited to it and agree to a sentence of time served, and Jefferson would waive any further appeals.

Ethics

Prosecutors

State Bar Will Implement New Ethics Rule: The California State Bar has approved an amendment to its Rule of Professional Conduct 5-110 that requires prosecutors to “make timely disclosure to the defense of all evidence or information known to the prosecutor that the prosecutor knows or reasonably should know tends to negate the guilt of the accused, mitigate the offense, or mitigate the sentence.” This rule is similar to the provisions in the American Bar Association’s Model Rule of Professional Conduct 3.8.

Rule Would Push Prosecutors to Release Evidence Favorable to Defense: New York State Chief Judge Janet DiFiore announced a formal rule that requires every judge in her state to instruct prosecutors to actively seek and disclose Brady information. Judges will have the power to level contempt charges against prosecutors who do not comply with that order. The rule is derived from a report issued by a state criminal justice task force that was issued earlier this year.

The Lessons of Cyrus Vance’s Campaign Contributions: A former elected city councilmember and district attorney suggest in The New York Times that limiting the dollar amount of campaign contribution and providing taxpayer-funded matching funds for district attorney campaigns would increase public confidence in New York district attorney’s offices.

Two Murder Convictions for One Fatal Shot: An article that discusses several multiple-defendant, multiple-trial cases argues that prosecutors should not be permitted to argue irreconcilable theories regarding, for example, which defendant was the shooter in a murder. (While the writer does not use the term, the practice he identifies could be stopped by the robust application of judicial estoppel.)

Supreme Court Suspends License of Top LaPorte County Lawyer for at Least Four Years for Eavesdropping on Privileged Conversations: A prosecutor in Indiana has been suspended from the practice of law for at least four years by the Indiana Supreme Court for intentionally eavesdropping on privileged communications between two defendants he was prosecuting and their attorneys. Robert Neary had been the chief deputy prosecutor in LaPorte County.

Martha’s Vineyard Prosecutor Guilty of Misconduct: The Massachusetts Board of Bar Overseers has found that an assistant district attorney committed misconduct by meeting with a represented person without his attorney. The lengthy decision recommended that the prosecutor receive a public reprimand.

Defense Attorneys

Weinstein Work Pulls Lawyer Back Into an Ethical Debate: In a story about white collar defense attorney David Boies, The New York Times (which fired Boies around the time the article was published) details Boies’s “potential ethical issues” in cases including his representation of both the Times and Harvey Weinstein. During his representation of Weinstein, Boies helped Weinstein execute a contract with a private investigation firm that had been hired to help block a negative article about Weinstein in Times.

Ex-Executives Move to Compel Law Firm to Produce Notes from Internal Investigation: Former executives from General Cable Corporation are arguing that a law firm should be required to produce documents from an internal investigation. The former executives argue that any privileges that the documents enjoyed has been waived by the firm’s decision to share those documents with the Securities and Exchange Commission and an independent auditor.

Court Puts Brakes on Ordering Kammen to Military Trial: An Indianapolis criminal defense attorney has successfully halted an order by a Guantanamo military commission that would have required him to continue his representation of an alleged mastermind of the 2000 USS Cole Bombing. Richard Kammenhad argued that he was unable to ethically represent Abd al-Rahim al-Nashiri because the government was monitoring their conversations even after Kammen had been assured the eavesdropping had ceased.

Accused of Misconduct, Criminal Defense Attorney Quits Practice: In Washington, criminal defense attorney John R. Crowley has surrendered his law license rather than responding to bar complaints. The Washington Association of Prosecuting Attorneys has contacted all county prosecutors about Crowley, noting that his former clients may well argue that he was ineffective in their cases.

Fitchburg Mayor Recommended for Public Reprimand for Lawyer Misconduct: Fitchburg, Wisconsin Mayor Jason Gonzalez—a criminal defense attorney—is facing a potential public reprimand for several counts of professional misconduct that were detailed in a complaint. Two former clients complained that Gonzalez was not diligent in his representation of them; he was also found to have provided misstatements and omissions to state investigators.

Op-Eds

Sen. Luther Strange: The Importance of Taking on Corruption: Senator, and former Attorney General, Luther Strange writes about his decision to build, support, and protect a public corruption unit at the Alabama Attorney General's Office, and the remarks he made as a keynote speaker at this year’s CEPI National Anticorruption Academy. While outlining some of the challenges that his office faced—including attempts by the legislature to zero out the office’s budget to retaliate against it for investigating the Speaker of the House—Sen. Strange describes the work done by his corruption prosecutors as “one of his proudest legacies.”

Legislation

US House Lawmakers Debate Overhaul of AML Regulations: The U.S. House of Representatives is considering several anti-money laundering and corporate transparency-related bills, including H.R. 3089(the Corporate Transparency Act of 2017), H.R. 2219 (the End Banking for Human Traffickers Act of 2017), and H.R. (the Counter Terrorism and Illicit Finance Act). The House Financial Services Committee recently held a hearing, “Legislative Proposals to Counter Terrorism and Illicit Finance,” to discuss the various proposals. Perhaps of particular interest to the state attorney general community, the proposals differ substantially in how they treat state prosecutors and authorities with only civil enforcement authority: the Corporate Transparency Act permits federal and state agencies to use a criminal or civilsubpoenas to obtain information about a company’s beneficial ownership; the Counter Terrorism and Illicit Finance Act would restrict that information to federal prosecutors armed with federal criminal subpoenas.

AML Reform Bill Gains Support in US Senate: The U.S. Senate is considering S. 1241, the “Combating Money Laundering, Terrorist Financing, and Counterfeiting Act,” which would help federal prosecutors obtain bank records and criminalize attempts to conceal or misrepresent to a U.S. financial institution the true ownership of an entity that seeks to use the institution’s services.

Tools

FinCEN Issues Advisory to Financial Institutions Regarding Disaster-Related Fraud: The Financial Crimes Enforcement Network (FinCEN) issued an advisory to warn financial institutions about the potential for fraudulent transactions in the wake of disasters, including recent hurricanes and wild fires.

Podcast: Bribe, Swindle, or Steal: TRACE International has a free podcast, with episodes that include a recent interview with David Green, Director of the UK Serious Fraud Office; a recap of the Bernie Madoff case (courtesy of Madoff’s former lawyer, Ira Sorkin); and a description of the “Fat Leonard” Navy scandal.

International

Israeli Anti-Corruption Police Question Netanyahu for Fifth Time: Israel Prime Minister Benjamin Netanyahu has been questioned by Israeli police for a fifth time in connection with two ongoing investigations. One investigation seeks to determine whether the Prime Minister accepted bribes; the other examines allegations that he promised a newspaper that he would curb its competitor in exchange for more favorable press coverage. Netanyahu’s lawyer called his client “an honest person,” but admitted that he had a “weakness for wealthy people.”

Fixing Everything But What’s Broken: Malaysia after the 1MDB Scandal: The Global Anticorruption Blogargues that the $1.7 billion in assets recovered by the U.S. Department of Justice from 1MDB, a Malaysian sovereign wealth fund that was looted, reveal limitations in the Malaysian government’s anticorruption efforts.

Prosecutor and Judge Issue Rare Response to Criticism From Turkey: Not long before the start of the trial of Turkish banker Mehmet Hakan Atilla, New York City federal prosecutors and the judge overseeing the case forcefully responded to allegations by Turkey that the investigation was tainted by politics. Turkish authorities have announced that they opened investigations into both former U.S. Attorney Preet Bharara—who was leading the office when the case was charged—and current acting U.S. Attorney Joon Kim. The lead defendant in the case, Reza Zarrab, is cooperating with the government and will testify at trial.

Confronting Corruption in South Africa: Why? How Much? How to?: Paul Hoffman, the director of South Africa’s Accountability Now, provides an assessment of corruption in South Africa and offers some solutions to fight it—including the creation of an independent, well-supported investigative body that focuses on only corruption.


Amie Ely is the Director of the Center for Ethics & Public Integrity and the Editor of the CEPI Newsletter and may be reached at 202-326-6041. The CEPI Newsletter is a publication of the National Association of Attorneys General. Any use and/or copies of this newsletter in whole or part must include the customary bibliographic citation. NAAG retains copyright and all other intellectual property rights in the material presented in this publication. For content submissions or to contact the editor directly, please e-mail aely@naag.org.

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