The National Attorneys General Training & Research Institute

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

CEPI Newsletter July 2018

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.

Training

On July 11, 2018, from 2:00-3:00 p.m. Eastern Standard Time, CEPI will present an hour-long webinar called "What McDonnell v. United States Means for State Corruption Prosecutors.” This free webinar—which will earn CLE credit—will feature Howard Master, Senior Enforcement Counsel for the New York Attorney General’s Office and University of Pennsylvania Adjunct Professor, and CEPI Director Amie Ely. Expect to learn about McDonnell, U.S. v. Sheldon Silver (which Howard tried), log-rolling, and some practical tips for investigating, charging, and trying corruption cases. This webinar is open only to prosecutors, who can register here.

Corruption Cases

State

Alabama AG Announces 20-Year Prison Sentences for Former Franklin County Admin on Ethics Charges: Former Franklin County, Alabama, County Administrator Crista Lynn Matthews has been sentenced to two terms of 20 years in prison. Matthews pled guilty to two felony ethics violations in connection with her theft of over $750,000 of funds that were property of the county she served. Investigators and prosecutors at the Alabama Attorney General’s Office determined that Matthews caused checks that were payable to the county to instead be issued in her name.

After Pleading Guilty to Corruption, Former Mayor Perez Wants Hartford to Pay Legal Bills: Former Hartford, Connecticut, Mayor Eddie Perez pleaded guilty last year to two state felony corruption charges related to his time in office and was sentenced to an eight-year suspended sentence. After his guilty plea, the Connecticut Attorney General’s Office sought to “revoke or reduce his pension.” Perez now seeks over $1 million from the state for his legal fees, arguing that the state was required to indemnify him for his costs under state law.

MBTA Repairman Charged With Stealing $80,000 in Cash from Agency’s Fare Box System: Stephen P. Faberberg, a repairman for the Massachusetts Bay Transportation Authority, has been charged in connection with the theft of over $80,000 from bus fare collection boxes he had been assigned to repair. The investigation that resulted in charges by the Massachusetts Attorney General’s Office included a “sting” with marked bills that had been placed in bus fare collection boxes that Faberberg was assigned to service. Those marked bills were later deposited into Faberberg’s bank account at an ATM.

Ex-Town Justice at Center of $11.8M Trust Scheme Pleads Guilty: Lawyer and former Town of Guilderland, New York, Judge Richard Sherwood pled guilty to a scheme in which he and an alleged co-conspirator plundered over $11 million from family trusts they were responsible for overseeing. Sherwood pled guilty to state and federal charges, admitting that he had—among other things—transferred a family camp on a lake to himself without the consent of the clients who owned it. He faces forty months to ten years in prison on state charges, which were brought by the New York Attorney General’s Office, and has agreed to cooperate with that office. In his federal case, Sherman has been ordered to pay over $10 million in restitution to his victims and is required to forfeit $3.7 million to the federal government.

Arkansas AG Hiring Investigators for Corruption Cases: The Arkansas Attorney General’s Office has announced the formation of a Public Integrity Division in its Special Investigations Department. Two law enforcement officers will be assigned to this new division, where they will investigate public integrity issues and join the Federal Bureau of Investigation and the Arkansas State Police on the Public Corruption Task Force.

Federal

Former Arkansas Senator Sentenced to 18 Months for Fraud: Former Arkansas State Senator Jake Files was sentenced to 18 months in federal prison and ordered to pay $84,000 in restitution after pleading guilty to obtaining a loan under false pretenses and fraudulently obtaining state grants. Files, the chair of the state senate’s Revenue and Taxation Committee, is among half a dozen state officials convicted of or implicated in schemes involving bribes and/or kickbacks.

Ex-NYPD Deputy Chief Michael Harrington Gets Two Years of Probation in Corruption Case: Former New York City Police Department Deputy Chief Michael Harrington was sentenced to two years of probation after accepting bribes from a prominent political donor, Jeremy Reichberg, in exchange for diverting NYPD resources at Reichberg’s request. Reichberg and retired NYPD Deputy Inspector James Grant will be tried in the case this fall.

Law Beat: At Kaloyeros Trial, Alleged Bid-Rigging Not “Garden Variety”: Prosecutors acknowledged that their theory in the trial of SUNY Polytechnic Institute founder Alain Kaloyeros is that Kaloyeros deprived SUNY Polytechnic of its right to control its own assets and exposed it to economic harm when he and his coconspirators represented to the college that the bidding process was fair, open, and competitive. As the defendants instead allegedly engaged in a scheme that deprived the college of information it needed to make decisions about the bid—rather than “garden variety” bid-rigging—the federal judge overseeing the case noted that the theory might be subject to successful attack on appeal. A similar case was recently reversed after conviction by the district judge before whom it was tried.

Investigative Tools

Getting to Zero: A Hidden Variable Behind Cooperation Rates?: A former federal prosecutor and current white collar defense attorney analyzes data from the U.S. Sentencing Commission that reflects a nationwide trend of reduced “substantial assistance” sentences, which suggest that fewer criminal defendants are successfully cooperating in federal cases since the U.S. Supreme Court made the sentencing guidelines advisory. He notes that one district—the Southern District of New York—appears to have bucked this trend and offers some analysis about why that might be. Given the potential utility of cooperators in corruption cases, this article may be of interest to prosecutors.

Ethics

Ethics Illustrated: How to Avoid Conflicts of Interest (video): The U.S. Department of Agriculture has released to the public a short animated video that provides “practical advice” for government employees seeking to avoid conflicts of interest.

Golden State Killer Case Raises Legal, Ethical DNA Issues: The editorial board of the Connecticut Law Tribune outlines some issues that it sees with the use of genealogy database sites by law enforcement, including in the case that resulted in the arrest of the so-called Golden State Killer.

Do Talking Head 'Experts' Have Special Ethical Responsibilities?: A piece in the New York Law Journal considers the ethical responsibilities that face “talking heads” who opine on current legal cases. The writer notes that while the Rules of Professional Conduct apply primarily to lawyers’ responsibilities to their clients, Rule 8.4 forbids lawyers from engaging in “conduct that is prejudicial to the administration of justice,” and the specialized ABA Standards on defense and prosecution functions require commentators to make reasonable efforts to become well-informed about the relevant facts and legal issues before opining about a case in the media.

Supreme Court Removes Flagler Judge from Bench for Ethical Violations: The Florida Supreme Court has removed 7th Circuit Judge Scott DuPont from the bench as a result of findings earlier this year by the Florida Judicial Qualifications Commission. The Commission found DuPont violated the code of judicial conduct by ordering money taken from litigants unlawfully; intentionally violating judicial campaign rules in a way that caused permanent harm to private citizens; prioritizing campaigning for re-election over lawful performance of his duties; and announcing to the public that he would ignore his judicial oath. It also implied that he lied during his testimony to the Commission.

Judge Broke Rules by Interviewing Witness in Child-Rape Case: Brooklyn, New York, Supreme Court Justice ShawnDya Simpson has imperiled a case against a defendant charged with raping a child by choosing to have an ex parte conversation with a witness in the case. Simpson denied a request by the local prosecutor trying the case for the case to be reassigned to a different judge after her apparent violations of the Administrative Rules of the Unified Court System. The defendant has claimed that the nine-year-old victim “took advantage of” him.

Legislation

What Is “Beneficial Ownership”? Why the Proposed TITLE Act’s Definition Is Sensible and Appropriate: The Global Anticorruption Blog defends the definition of “beneficial ownership” in the TITLE Act—a proposed bill that would require the disclosure of the real (or “beneficial”) owners of corporations and limited liability companies to governments of the states where they were incorporated.

Anti-Money Laundering Enforcement Needs Update, Senator Says: A congressional hearing before the Senate Banking Committee addressed U.S. anti-money laundering reporting requirements, including FinCEN’s suspicious activity reports (SARs). The hearing comes as the House Financial Services Committee considers H.R. 6068, which would update the 1970 Bank Secrecy Act.

International

FinCEN Issues Advisory on Human Rights Abuses Enabled by Corrupt Senior Foreign Political Figures and Their Financial Facilitators: The Financial Crimes Enforcement Network (FInCEN) has issued an advisory to U.S. financial institutions that highlights the connection between corrupt senior foreign political figures and human rights abuses.

Inside the Fall of Mossack Fonseca: The Organized Crime and Corruption Reporting Project (OCCRP)—a consortium of investigative centers, media, and journalists—writes about the dissolution of Mossack Fonesca, the Panamanian law firm at the center of the so-called “Panama Papers.” One take-away from the piece is that the firm appears to have been willfully blind about the identities of its “clients” and sought to learn who it actually represented only after it realized that its documents had been stolen.

Arrest Ordered for Former El Salvador President Mauricio Funes: El Salvador Attorney General Douglas Menendez has ordered the arrests of that country’s former president, Mauricio Funes, and 30 members of Funes’s inner circle on corruption charges in connection with a scheme to allegedly steal hundreds of millions of dollars from public coffers. Funes, who is living in exile in Nicaragua, has argued that the charges came as a result of a political vendetta.

Former Panama President Martinelli Extradited from US: Former Panama President Ricardo Martinelli has been extradited from the United States to face corruption and illegal wiretapping charges in his home country. The Panama Supreme Court ordered his arrest in 2015 over accusations he used public funds to illegally wiretap over 150 people, including high-ranking members of the opposition party. His extradition followed his unsuccessful application for political asylum in the U.S.


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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