This 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 expresses a view as to the accuracy of news accounts, nor as to the position expounded by the authors of the hyperlinked articles.
CEPI RESOURCES
The Anticorruption Manual: A Guide for State Prosecutors: CEPI’s comprehensive Anticorruption Manual was published in August 2021. This is the first publication in thirty years to guide prosecutors who investigate and charge public corruption crimes. It is the first-ever book designed to address the needs of state and local corruption prosecutors. The book is available for purchase; members of the attorney general community should log into to their NAAG accounts to access a discount code, and other prosecutors should email Zayn Hasan at zhasan@naag.org for their discount code. A free sample chapter addressing judicial corruption is available for download. A series of articles further describes the purpose and contents of the manual.
CORRUPTION CASES
STATE
Former Clerk of Small Alabama Town Accused of Stealing More than $100,000 in Public Funds: In Alabama, former clerk for the town of Akron Diann Taylor was indicted on charges of intentionally using her official position to access public funds, theft of public funds, and making a false statement to the Alabama Ethics Commission. The case is being prosecuted by the Alabama Attorney General’s Special Prosecutions Division with the assistance of the Department of Examiners of Public Accounts and the Alabama Ethics Commission.
Former Kauai Police Department Clerk Indicted on Felony Theft Charges: In Hawaii, former Kauai Police Department Records Clerk Mikalynn Hiranaka was indicted on charges of computer fraud in the first degree and theft in the first degree. Hiranaka accessed and used the state computer system with the intent to commit theft of more than $20,000 worth of property from the Hawaii Criminal Justice Data Center. The case is being prosecuted by the Hawaii Attorney General’s Office.
Former Assistant Prosecutor Pleads to Impaired Driving, Weapon Charges, Receives Fine: In Michigan, former Shiawassee County Assistant Prosecutor Chris Brown pleaded guilty to impaired driving and possession of a firearm by a person under the influence, which are misdemeanors. Brown was charged after he arrived to work visibly intoxicated in 2021. Brown was terminated from his position as a prosecutor, relocated out of state, was ordered to pay a fine, and is under a probation process with the State Bar of Michigan requiring his participation in a substance rehabilitation program. The case was brought by the Michigan Attorney General’s Office.
Former Somerset County District Attorney Jeffrey Thomas on House Arrest Awaiting Trial: In Pennsylvania, former Somerset County District Attorney Jeffrey Thomas was charged with assault, reckless endangerment, and harassment in connection with a domestic violence incident in May 2021. Thomas was also charged with harassment and reckless driving in connection with an incident that occurred in March 2022 between Thomas and another driver. In September 2021, Thomas had been charged with rape, indecent assault, strangulation, simple assault, and criminal trespass. All charges are brought by the Pennsylvania Attorney General’s Office. Thomas has been suspended without pay after charges were initially filed. He is now confined in the home of a relative with electronic monitoring and must avoid contact with any person associated with the charges.
FEDERAL
Ex-County Assessor Pleads Guilty in Bribery Corruption Case: Felipe Fuentes, a former tax assessor in Santa Cruz County, Arizona, pleaded guilty to conspiracy to commit honest services wire fraud for his role in receiving cash and favors in exchange for reducing assessed values of properties owned by the bribe payors. Fuentes received benefits including $20,000 in cash and free use of a 17-acre ranch owned by one of the bribe payors.
Former DEA Agent Sentenced to 135 Months for Taking Bribes: Nathan Koen, a former Drug Enforcement Administration agent with the Little Rock, Arkansas DEA office, was sentenced to 135 months in prison. Koen had been charged with one count of conspiracy to possess with intent to distribute and to distribute heroin, cocaine, and methamphetamine, and one count of bribery of a public official, and he pleaded guilty to the bribery charge in 2021. Koen accepted bribes from a drug trafficker in order to help facilitate a drug conspiracy by giving law enforcement information to the trafficker.
Beverly Hills Developer to Plead Guilty to Bribery over $45 Million Lease: Arman Gabaee, a real estate developer in Beverly Hills, California, pleaded guilty to one count of bribery for offering to buy a million-dollar home for a Los Angeles County public official, Thomas Shepos, in exchange for the official’s assistance in securing a $45 million county lease. Gabaee has also agreed to pay a fine of $1,149,000 and restitution. Beginning in 2011, Gabaee paid Shepos bribes and kickbacks of $1,000 per month in exchange for preferential treatment, leases, non-public information, and other official acts. Shepos began cooperating with law enforcement in 2016, which resulted in recorded conversations showing that Gabaee paid Shepos thousands of dollars in bribes. Shepos pleaded guilty in 2018 to one count of making a false statement to federal investigators and one count of subscribing to a false tax return.
Murrieta Homeland Security Agent Convicted of Bribery: A former special agent with Homeland Security Investigations based in California, Felix Cisneros Jr., was found guilty by a jury of one count of conspiracy to commit bribery of a public official, one count of bribery, 26 counts of money laundering, and two counts of filing a false tax return. Over a 180-month period beginning in 2015, Cisneros accepted over $100,000 in cash and benefits from a person associated with organized crime. These benefits were given in exchange for various official actions, including accessing a government database to alter information, obtaining an official letter allowing parole of the bribe payor’s relative, and sharing information relating to a government investigation of the payor’s associate. Cisneros also underreported his income on federal tax returns.
Guilty Plea Part of Ongoing US Probe into Caltrans Bribery: Choon Foo “Keith” Yong, former contract manager for the California Department of Transportation (Caltrans), pleaded guilty to bid rigging and bribery for his role in a scheme to thwart the competitive bidding process for Caltrans contracts. Yong received over $800,000 in bribes in connection with the scheme and conspired to steer contracts to preferred co-conspirator bidders. This case is part of a joint investigation by the U.S. Department of Justice Antitrust Division, the U.S. Attorney’s Office for the Eastern District of California, the FBI, and the U.S. Justice Department’s Procurement Collusion Strike Force.
Former Central California Water Manager Stole $25 Million in Water Over 23 Years, Prosecutors Say: Dennis Falaschi, the former general manager of a Central Valley, California water district, was indicted on charges of conspiracy, theft of government property, and filing false tax returns. Beginning in 1992, Falaschi was aware of a leak in an abandoned drain turnout under Falaschi’s control. He installed a new gate on the drain and instructed state employees to use the new gate to steal federal water on multiple occasions. The water was not metered at that gate. It combined with the water district’s other sources and was sold to customers or it was pumped back into the federal canal for water credits. Falaschi was charged by the California Attorney General’s Office in 2018 for misuse of public funds and violation of hazardous waste laws.
Ex-Ga. Insurance Commissioner Indicted on Health Care Fraud Charges: Former Georgia Insurance Commissioner John Oxendine was indicted on charges of conspiracy to commit health care fraud and conspiracy to commit money laundering. Oxendine’s alleged conduct occurred after he was no longer serving as commissioner. The indictment alleges that Oxendine conspired to defraud health insurance companies by pressuring doctors to order unnecessary tests from a specific lab. One of the doctors and Oxendine received kickbacks from the lab company. The lab company submitted insurance claims seeking over $2.5 million in payment for unnecessary lab tests ordered by the doctor’s practice and paid $260,000 in kickbacks resulting from those tests.
Indianapolis Casino Executive Pleads Guilty to Funneling Money to County GOP: John Keeler, a casino executive, pleaded guilty to making false statements on the casino’s corporate tax return by falsely reporting political contributions as deductible business expenses. Keeler had given $41,000 in corporate funds to a political consultant, Kelley Rogers, for the purpose of contributing the funds to the Greater Indianapolis Republican Finance Committee. Keeler then falsely reported those funds as deductible business expenses. Darryl Brent Waltz, former Indiana state senator and a 2016 candidate for U.S. Congress, pleaded guilty to making and receiving illegal conduit contributions and making false statements to the FBI as well. Waltz and Rogers directed corporate funds from the casino into the Brent Waltz for Congress campaign through straw donors.
Former Kentucky Legislator Pleads Guilty in Case Involving $2.7 Million in Health Fraud: Former Kentucky State Representative Robert Goforth pleaded guilty to healthcare fraud and money laundering for improperly billing health insurance programs, including Medicare and Medicaid, for prescriptions that customers did not pick up. A pharmacy that Goforth owned engaged in a scheme where the pharmacy purchased one dose of a medication, then billed an insurance company for a prescription when fulfilled by the pharmacist but would not properly refund the insurance company if the prescription was never picked up. The pharmacist would place the dose back on the shelf and bill the insurance company again for the same dose with a different customer. This occurred for several months and resulted in $2.7 million in excess billing. Goforth resigned his position as a state representative in August 2021 when he was charged with strangling his wife during a domestic dispute. Goforth’s former running mate in the 2019 governor’s race and former County Attorney for Lawrence County, Kentucky, Michael Hogan, also pleaded guilty to wire fraud and federal program theft for issuing improper “bonus” checks to his wife, who was also a county employee, drawing on delinquent tax funds that should have been used on county operating expenses.
‘I Think We Are All Disappointed’: Former Mashpee Wampanoag Tribal Chairman Convicted: Cedric Cromwell, former Council Chairman and Gaming Authority President of the Mashpee Wampanoag Tribe in Massachusetts, was convicted by a jury on two counts of accepting bribes as an agent of an Indian tribal government official, three counts of extortion under color of official right, and one count of conspiring to commit extortion. David DeQuattro, owner of an architecture and design firm that had contracted to serve as the Gaming Authority’s representative in building a resort and casino, was convicted of one count of paying a bribe to an agent of an Indian tribal government. DeQuattro paid several bribes to Cromwell in exchange for Cromwell protecting DeQuattro’s contract with the Gaming Authority.
Feds: 2 Wayne County Employees Embezzled $1.7 Million Meant for Roads: Kevin Gunn and John Gibson, two employees with the Roads Division of Wayne County, Michigan, were charged with conspiring to commit and committing federal program theft, wire fraud, and money laundering. The defendants allegedly used public funds to purchase generators and other power equipment from approved Wayne County vendors, then took possession of the equipment and sold it online for personal profit. The total value of equipment purchased was approximately $1.7 million. The investigation and prosecution are the result of collaboration between federal authorities and the Wayne County Sheriff’s Department and Prosecutor’s Office.
Springfield Health Care Charity Pays $8 Million Fine Related to Federal Embezzlement, Bribery Investigation: Springfield, Missouri-based nonprofit Preferred Family Healthcare entered into a non-prosecution agreement with federal authorities and agreed to pay more than $8 million in forfeiture and restitution to the federal government and the state of Arkansas. Preferred Family Healthcare illegally profited from a scheme to obtain federal funds through fraud and bribery. Preferred Family Healthcare admitted that its former officers and employees embezzled funds from the nonprofit and bribed several Arkansas state officials. Former executives of the nonprofit as well as former Arkansas state officials have pleaded guilty in separate criminal cases connected to this matter.
Former NYPD Officer From Plainview Sentenced for Bribery, Drug Trafficking: Robert Smith, former New York Police Department officer, was sentenced to 97 months in prison after pleading guilty to using interstate facilities to commit bribery and attempting to transport heroin. Between 2016 and 2020, Smith engaged in multiple corrupt schemes for personal gain. One scheme involved responding to automobile accidents and directing the damaged vehicles to a specific tow truck company, rather than using the official NYPD process for finding a tow truck business to respond to the scene of an accident. The specific towing company then paid Smith and co-defendants thousands of dollars in cash bribes. Another scheme involved obtaining names and identifying information from automobile accident victims and selling that information to physical therapy businesses and personal injury attorneys so they could solicit the injured parties for business. After retiring from NYPD, Smith also was involved in a scheme to transport illegal drugs.
Ex-Nassau County Executive Edward Mangano and His Wife Sentenced: Edward Mangano, former Nassau County, New York executive, was sentenced to 12 years in prison and a $20,000 fine. In 2019, a jury found Mangano guilty of accepting bribes and kickbacks as well as conspiracy to obstruct justice. Mangano’s wife, Linda Mangano, was found guilty of conspiracy to obstruct justice, obstruction of justice, and making false statements. Mangano had helped a Long Island restaurant owner obtain loans in exchange for gifts, including a lucrative no-show job at the restaurant for his wife.
Ex-Secretary of Tiny Borough Gets Prison in $300K Embezzlement Scheme: Tammy Laird, former secretary of Corsica, Pennsylvania, was sentenced to 21 months in prison and ordered to pay $265,000 in restitution for embezzling a total of over $300,000 from Corsica, Pennsylvania, which is a town of 319 people. For eight years, Laird issued checks from the town’s account to herself and her relatives.
The FBI Arrests the Mayors of Humacao and Aguas Buenas for Public Corruption: Reinaldo Vargas Rodriguez, mayor of Humacao, Puerto Rico, and Javier Garcia Perez, mayor of Aguas Buenas, Puerto Rico, were indicted on charges of conspiracy, soliciting bribes, and extortion. Both mayors are alleged to have received cash bribes from business people in exchange for awarding municipal contracts for waste disposal and paving services. The governor of Puerto Rico has demanded that the mayors resign.
Former USDA Technician Pleads Guilty to Bribery: Roberto Adams, a former animal health technician for the U.S. Department of Agriculture in Laredo, Texas, pleaded guilty to accepting over $40,000 in bribes. Adams accepted the bribes from Mexican cattle brokers in exchange for allowing cattle to enter the United States without proper quarantine or legitimate inspection.
Former Dallas Officer Sentenced to Two and a Half Years for Lying About Relationship with Nightclub Owner: Eddie Villarreal, a former Dallas, Texas police officer, was sentenced to 30 months in prison for making a false statement to the FBI relating to his role in obstructing an FBI investigation into a drug conspiracy. Villarreal pleaded guilty in 2018. While Villarreal was a police officer, he also worked as a security guard for the owner of several nightclubs. After becoming aware that the FBI was investigating drug dealing in those nightclubs, Villarreal offered to help the FBI with their investigation, but was actually passing information back to the nightclub owners.
Chesapeake Woman Pleads Guilty to Bribing Government Official in Return for $1.37M Contract: Jennifer Strickland, the president of a construction company that contracts with the federal government, pleaded guilty to bribing a government official in return for a contract valued at $1.37 million. Strickland made $43,500 in cash payments to a government official over the course of a year and a half.
ETHICS
New Law Toughens Stock Disclosure Requirements for Federal Judges; Separate Ethics Bill Faces ‘Steep Climb’: The newly enacted Courthouse Ethics and Transparency Act requires federal judges with lifetime tenure to report securities trades of more than $1,000 within 45 days, and requires the Administrative Office of the U.S. Courts to create a searchable public database for judicial financial disclosure forms. Judges were already required to file financial disclosure reports and were already barred from hearing cases involving parties in which they have financial interest. This new law promotes greater public transparency.
Prosecutor Not Entitled to Immunity in Fabricated Evidence Suit: The Fifth Circuit Court of Appeals rejected an argument by Scott Perrilloux, a Louisiana prosecutor, that he was entitled to absolute immunity from a lawsuit. The suit was brought by a man convicted of murder following a prosecution by Perrilloux. In 2016, the U.S. Supreme Court overturned the murder conviction and the main witness placing the defendant at the murder scene recanted his testimony. The defendant sued Perrilloux for violating his civil rights by fabricating evidence. The Fifth Circuit ruled that Perrilloux was not entitled to absolute immunity for the alleged conduct at issue in the suit because coercing a witness into giving false testimony is investigatory rather than advocatory in function.
New Arizona Law Will Require State Bar to Pay Attorney Fees in Lost Legal Discipline Cases: A new Arizona law requires the state bar to pay legal fees and costs if it brings a disciplinary case against an attorney and loses after a final disposition. If the bar dismisses a case prior to disposition, it does not need to pay fees and costs.
Kentucky Supreme Court Moves to Suspend Prosecutor for 3 Cases of Misconduct: The Kentucky Supreme Court has ordered Rick Boling, the commonwealth’s attorney in Christian County, Kentucky, to show cause why he should not be suspended from practicing law. The Supreme Court issued the order after it learned that a judge dismissed an indictment because of Boling’s prosecutorial misconduct during a grand jury proceeding. Boling had committed two additional instances of misconduct in the past.
Disciplinary Panel Asks for Public Reprimand of Gardner over Greitens Case: In St. Louis, Missouri, a three-person disciplinary panel recommended a public reprimand of St. Louis Circuit Attorney Kimberly Gardner for her conduct during a 2018 prosecution of former Governor Eric Greitens. The panel found that Gardner violated rules of professional conduct by failing to ensure compliance with discovery obligations and by erroneously representing to the court that all interview notes had been turned over to the defense when they had not. The panel found that the failure to disclose and produce the documents was not intentional and did not amount to a breach of public trust.
After Years in Committee Limbo, a Statewide Ethics Code is Finally Adopted in Vermont: Vermont has enacted a code of ethics for state government employees in all three branches. It addresses conflicts of interest, preferential treatment, gifts, outside employment, use of private office for public gain, and whistleblower protections.
INTERNATIONAL
US to Seize $63m Los Angeles Mansion It Claims Was Bought with Bribe Money: The United States is seeking civil forfeiture of a 30,000-square-foot home in Los Angeles that is alleged to have been purchased by Gagik Khachatryan, former Armenian public official, with bribe money paid by an Armenian businessman in exchange for favorable tax treatment. Khachatryan has been charged in Armenia with receiving bribes and the businessman has been charged in Armenia with paying bribes. The home was recently listed for sale at $63.5 million, but it was purchased in 2011 for $14.4 million allegedly by a trust on behalf for Khachatryan and his sons.
U.S. Sanctions Guatemala’s Attorney General Over Accusations of Corruption: The United States publicly designated Maria Consuelo Porras Argueta de Porres, the current attorney general of Guatemala, as ineligible for entry into the United States. The designation is under section 7031(c) of the Department of State, Foreign Operations, and Related Programs Appropriations Act because of Porras’s involvement in significant corruption.
Former U.S. Ambassador Richard Olson Pleads Guilty to Illegal Foreign Lobbying: Richard G. Olson, former ambassador to the United Arab Emirates and Pakistan and former special representative for Afghanistan and Pakistan, pleaded guilty to illegal lobbying and failing to disclose gifts he received while working for the U.S. State Department. Olson had been charged with making false statements and aiding and assisting a foreign government with intent to influence decisions of United States officers.
OTHER
Court Sides with Ted Cruz and Strikes Down Campaign-Finance Restriction Along Ideological Lines: The U.S. Supreme Court struck down a federal campaign finance law limiting repayment of loans candidates make to their own campaigns. Section 304 of the Bipartisan Campaign Finance Reform Act capped at $250,000 the amount of post-election contributions a candidate can use to repay loans the candidate made to his or her own campaign before the election. Cruz had made a $260,000 loan to his own campaign prior to the election and was seeking to repay the full amount of the loan through post-election contributions. The Court reasoned that the loan-repayment limitation burdened core First Amendment speech by restricting the sources of funds that campaigns may use to repay candidate loans, increasing the risk that such loans will not be repaid, and inhibiting candidates from loaning money to their own campaigns. That burden was not justified because the government made no showing of quid pro quo corruption in the context of post-election loans. For more discussion of this case, see the NAAG’s Supreme Court Report: Federal Election Commission v. Ted Cruz for Senate, 21-12.
