The National Attorneys General Training & Research Institute
CEPI Newsletter October 2016
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, nor as to the position expounded by the authors of the hyperlinked articles. The Op-Ed section, in particular, is included to provoke thought about the scope and scale of corruption.
CEPI hosted an Anti-Money Laundering Summit for subject matter experts from attorneys general offices, the federal government, and non-governmental organizations on September 27, 2016. Attendees discussed an anti-money laundering manual that NAAG anticipates publishing in 2018, along with trends in money laundering and anti-money laundering enforcement.
Peru Attorney General Pablo Sanchez Velarde met with NAAG Executive Director Jim McPherson, NAGTRI Director Chris Toth, CEPI Director Amie Ely, and NAGTRI Program Counsel Jeanette Manning to discuss areas of shared interested, including training prosecutors and anticorruption investigation and enforcement.
In December, CEPI will hold its first mobile ethics training course at the Alabama Attorney General’s Office. Please contact Program Specialist Laurel Pugliese at email@example.com for scheduling requests of mobile ethics or anticorruption trainings. For any further questions about the substance of these trainings, please contact CEPI Director Amie Ely at firstname.lastname@example.org.
Cases: Investigations, Prosecutions, and Appeals
AG: Kaloyeros Charged for “Brazen Bid-Rigging Using Taxpayer Dollars”: In what New York Attorney General Eric Schneidermancalled “brazen bid-rigging using taxpayer dollars,” Alain Kaloyeros, former president of the SUNY Polytechnic Institute, was charged in New York state court in connection with a scheme to steer contracts “to his cronies.” Also charged was Joseph Nicolla, one of the developers Kaloyeros allegedly fed inside information. The state charges were unsealed on the same day as federal charges against Kaloyeros and two former aides to Governor Andrew Cuomo, Joseph Percoco and Todd R. Howe. The charges arose out of investigations into Cuomo’s plan to inject $1 billion in state funds into Buffalo-area factories, research facilities and other projects, known together as the “Buffalo Billion.”
Kenoi Criminal Trial To Get Underway This Week: Jury selection began on October 10, 2016, for the criminal trial of Hawaii County Mayor Billy Kenoi on two felony and two misdemeanor theft charges, one count of false swearing and several counts of tampering with a government record over his misuse of a county credit card. Over 1,600 Hawaii Island residents have been summoned for voir dire, which is expected to last two weeks. Last month, a video of Kenoi—apparently inebriated—using profanity in a hotel conference hospitality room received coverage in local press. In what is said to be one of the biggest trials in decades, Kenoi will be tried by prosecutors in the office of Hawaii Attorney General Doug Chin, including deputy attorney general Kevin Takata, an alumnus of the inaugural CEPI Anticorruption Academy.
St. James Parish President Indicted on Corruption Charges: Louisiana AG: The office of Louisiana Attorney General Jeff Landry has charged Timothy Roussel, the president of St. James Parish, and two other Parish officials on allegations the three engaged in schemes to charge over $70,000 in fraudulent expenses. Roussel, Blaise Gravois, and Ashley Poche are alleged to have used public employees and private companies to make improvements on private property, which were funded by taxpayer dollars. This case is part of a crackdown on public corruption by General Landry, which includes the recent conviction of Curtis Mack, a former member of the Louisiana Department of Health and Hospitals, who was prosecuted by assistant attorney general Eli Abad, another alumnus of CEPI’s Anticorruption Academy.
Corruption Unit that Took Down Mike Hubbard Sets Sights on Birmingham: Alabama Attorney General Luther Strange’s corruption unit—fresh off its successful prosecution of Alabama Speaker of the House Mike Hubbard—is said to be empanelling a special grand jury to investigate corruption in Birmingham. According to the judge who signed the order, Matt Hart— the lead prosecutor on the Hubbard case and a third Anticorruption Academy alumnus—sought and received permission to empanel the grand jury.
Defendant Baroni takes the stand in Bridgegate trial: As the so-called “Bridgegate” trial entered its fourth week, defendant Bill Baroni took the stand to refute allegations that the closure of the George Washington Bridge in September 2013 was intended to punish a mayor who refused to endorse New Jersey Governor Chris Christie. Baroni was the former deputy executive director of the Port Authority of New York and New Jersey. Baroni’s testimony follows that of cooperating witness David Wildstein, who told jurors that both Baroni and his co-defendant, Bridget Anne Kelly—Christie’s former deputy chief of staff—were involved in the scheme to retaliate against the mayor of Fort Lee, New Jersey.
Feds Indict 80 People—Including 18 Corrections Officers—in 'Massive' Maryland Prison Corruption Case: In the largest federal indictment in Maryland history, federal prosecutors have charged 80 people with conspiring to smuggle drugs, cellphones, pornography, and other contraband into the Eastern Correctional Institute in Westover, Maryland. The defendants include 18 corrections officers, some of whom are also alleged to have had sex with inmates or to have told inmates the names of other prisoners who were reporting misconduct to prison officials so the inmates could retaliate. In two separate incidents in July, defendant corrections officers directed defendant inmates to stab other prisoners.
McDonnell and Its Potential Progeny
“McDonnell” and the Future of Political Corruption Cases: Two lawyers in private practice argue that McDonnell is not a sea-change in the criminalization of corruption but rather a reminder of the necessity of narrow jury instructions that are properly tailored to the elements of the crimes alleged by the government.
Ray Nagin Exhausts Appeals as Supreme Court Refuses Jailed Ex-Mayor's Case: The U.S. Supreme Court has denied a petition for a writ of certiorari in the federal case against former New Orleans Mayor Ray Nagin, who argued that McDonnell warranted a vacation of his ten-year sentence for bribery, conspiracy, wire fraud and filing false tax returns. Similar legal challenges have been launched by other convicted politicians, including former Rep. Bill Jefferson, who represented a district including New Orleans in the U.S. House of Representatives and is serving a 13-year sentence after being convicted of federal fraud, bribery, and racketeering charges; and former Rep. Chaka Fattah, who was recently convicted of federal corruption charges in Pennsylvania.
New Prosecutor Ethics Bureau Chief Hopes to Start a Trend: Bronx District Attorney Darcel Clark has hired Victor Olds, a former federal and state prosecutor, to head her office’s new Professional Responsibility Bureau, which will review ethics complaints against Bronx prosecutors. Olds will also be charged with creating a curriculum for ethics training for Bronx County assistant district attorneys and ensuring that office complies with the city's conflict of interest rules.
In California, a new law makes it a felony for prosecutors or other law enforcement officers to withhold or alter any evidence “knowing that it is relevant and material to the outcome of the case.” In the same state, a new ethics rule that would require additional disclosures to the defense is being debated.
Wal-Mart Must Face U.S. Class Action Over Alleged Mexican Bribery: A federal district judge in Arkansas has granted class certification to plaintiffs in a lawsuit alleging that Wal-Mart defrauded shareholders by concealing suspected bribery intended to help it rapidly expand in Mexico. The plaintiffs point to the $17 billion dollar drop in Wal-Mart’s stock price on the heels of a 2012 New York Times article about the retailer bribing Mexican officials to speed up store openings, and allege that Wal-Mart knew about the bribes by 2005—and, the plaintiffs contend, hid that fact to protect the stock price.
Corruption Ringleader Admits Paying Bribes, Passing Funds to Popular Party: In what is being described as the largest, most complicated corruption trial in Spain’s history, a businessman named Francisco Correa has been testifying about bribes he paid to a number of Spanish politicians in the Popular Party. Correa—who is testifying as a witness for the prosecution—is one of 37 expected witnesses in this sprawling corruption case involving six regional governments and nearly 200 official suspects.
Peru’s Opposition Party Kills Anti-Corruption Bill: Peru’s Popular Force party, led by the daughter of former president Alberto Fujimori—who himself fled Peru to avoid a lengthy sentence for corruption and crimes against humanity—rejected a bill that would have strengthened prosecutors’ ability to investigate corruption and money laundering. The bill would have permitted Attorney General Pablo Sanchez Velarde’s Financial Intelligence Unit (UIF) to view money transfers when investigating money laundering and the financing of terrorism. With the bill’s failure, Peru remains the only Latin America country that does not permit its financial investigative unit to access the bank accounts of people it investigates. Perhaps due to her rejection of the bill, Keiko Fujimori was defeated at the polls in September by incumbent Pedro Pablo Kuczynski—who is now facing a corruption scandal involving his health advisor.
Offshore Secrets of Brexit Backer Arron Banks Revealed in Panama Papers: The Panama Papers have revealed a network of offshore companies linked to Arron Banks, who spent £7.5 million to support “Brexit,” Britain’s exit from the European Union.
Media: Investigative Journalism About Corruption
Exposed: The Secret Powerhouse Processing Millions In Global Fraud: A lengthy CNN Money Investigation discusses the months-long investigation of Iowa Attorney General Tom Miller into the role of PacNet, a Vancouver, Canada company that allegedly processed payment for the perpetrators of various fraudulent mailings for over 20 years. In late September 2016, the U.S. Treasury Department deemed PacNet a "significant transnational criminal organization" and PacNet was charged by federal prosecutors with defrauding victims out of tens of millions of dollars. In separate but related actions, General Millerfiledconsumer fraud lawsuits against two out-of-state mailing operations alleged to be predatory businesses using deceptive mailings to defraud the elderly and other vulnerable Iowans.
Bharara: Support Investigative Journalism: Manhattan U.S. Attorney Preet Bharara credited investigative journalism into the “Buffalo Billion” scandal with his office’s decision to launch a criminal investigation into apparent bidding irregularities.
Tools and Tips
Guide to Combating Corruption & Fraud in Development Projects: The International Anti-Corruption Resource Center has published a step-by-step guide on how to prevent corruption, bid-rigging, collusive bidding, and fraud in international development projects. While this guide is primarily intended for those investigating projects in developing countries, aspects of it—such as the “red flags” that might suggest bid-rigging or other forms of corruption—may also be useful for investigations involving domestic allegations.
Our friends at Columbia Law School’s Center for the Advancement of Public Integrity have released papers discussing several areas of interest to state corruption prosecutors, including a terrific summary of corruption-fighting models in various states, “An Overview of State and Local Anti-Corruption Oversight in the United States,” and information about several effective task forces used by local, state, and federal prosecutors, “Strategies for Increasing and Improving Public Corruption Prosecutions: The Task Force Model.”
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 email@example.com.