The National Attorneys General Training & Research Institute
CEPI Newsletter August 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.
Registration for the second annual CEPI Anticorruption Academy is open until August 14, 2017. The Academy will be held in Minneapolis, Minnesota, from August 21-25, 2017, and will include presentations about the successful 2016 prosecution of Alabama Speaker of the House Mike Hubbard by the Alabama Attorney General’s Office. The Academy is open to state, federal, local, and international prosecutors.
GHURA Case Exposes Problems with Government Boards: The Guam Attorney General’s Office filed a 47-count complaint charging six former commissioners of the Guam Housing and Urban Renewal Authority (GHURA) and GHURA’s former executive director, David Sablan, with violating open government laws and with government misconduct. The case, which arose from a partnership between federal and state authorities, is being prosecuted by Phil Tydingco and by Joseph McDonald, an alumnus of the inaugural Anticorruption Academy.
UM-Eastern Shore Employee gets 18 Months in Jail for Stealing Student Checks: Carla Renee Bailey, the former coordinator for Science, Technology, Engineering, and Mathematics at the University of Maryland-Eastern Shore, has been sentenced to 18 months in jail. Bailey pled guilty to stealing 40 checks that were made payable to eleven different students, forging the students’ signatures, and taking the cash. The students whose checks were stolen were work-study fellows. The Maryland Attorney General’s Office prosecuted the case.
City Councilman Convicted of Stealing Thousands in Public Funds: New York City councilman Ruben Wills was convicted at trial of multiple counts of fraud and grand larceny. Prosecutors from the New York Attorney General’s Office proved that Wills stole more than half of a $33,000 grant, which was supposed to support single parents and obesity prevention, and used the money for personal shopping sprees.
More Oregon Bribery Charges Land in Energy Scandal: Consultant Martin Shain has been charged in a 78-count indictment, filed by the Oregon Attorney General’s Office, with bribery, racketeering, theft, and tax evasion. Shain is accused of bribing Joe Colello, a former agency manager at the Oregon Department of Energy, who pled guilty just days before Shain’s indictment was returned, so Colello would arrange the sale of tax credits the agency issued to developers and owners of renewable energy and conservation projects. The scheme brought in about $1.3 million in fees, mostly from public agencies, and Shain paid Colello about $300,000 in bribes. Prosecutors on the case include inaugural CEPI Anticorruption Academy alumnus Elijah Michalowski.
Second Circuit Court of Appeals Blocks Release of HSBC Monitor Report: In a decision that overruled the court below, a federal court of appeals has blocked the release of a report authored by a monitor overseeing HSBC’s compliance with a $1.9 billion deferred prosecution agreement. HSBC and the Department of Justice jointly appealed the trial court’s decision to release the report, and the Second Circuit decided that, because the report was not a “judicial document,” separation of powers principles forbade its public release. Prosecutors had argued that, the 1,000-page report, if released to the public, would provide a “road map” for criminals who wished to exploit vulnerabilities in the banking system.
FinCEN Fines BTC-e For Violating U.S. Anti-Money Laundering Laws: The Financial Crimes Enforcement Network (FinCEN) has assessed a civil penalty of over $110 million against BTC-e, a/k/a “Canton Business Corporation,” for willfully violating U.S. anti-money laundering laws. The Russian national alleged to control BTC, Alexander Vinnik, was also assessed a $12 million penalty. Vinnik, who was arrested in Greece on July 26, 2017, faces related federal criminal charges in connection with allegedly using Bitcoin to launder $4 billion of criminal proceeds.
Appeals Court Upholds Conviction of Former Assemblyman William Boyland Jr.: The Second Circuit Court of Appeals has affirmed the federal conviction of former New York State Assemblyman William Boyland, who was convicted of 21 public corruption-related offenses. Boyland argued that McDonnell required reversal of his conviction, as the jury instructions did not specify that he was required to commit an “official act” within the meaning of the federal bribery statute. In a 24-page decision, the court concluded that while the trial court’s instructions on all but six counts were erroneous, Boyland did not shoulder his burden to prove those errors were harmful.
Former Assembly Speaker Silver's Corruption Conviction Overturned: Days after it upheld Boyland’s conviction, the Second Circuit reversed the conviction of former state assembly speaker Sheldon Silver and remanded the case for a retrial. This time, the court said, the erroneous jury instructions were not harmless. In a written statement, Acting U.S. Attorney Joon Kim said, “While we are disappointed by the Second Circuit’s decision, we respect it, and look forward to retrying the case. … Although it will be delayed, we do not expect justice to be denied.”
Special Prosecutor Investigating Commonwealth Attorney who tried David Dooley Case: The Kentucky Attorney General's Office will maintain control of the retrial of David Dooley, who was convicted of murdering his coworker in 2014. After Dooley’s trial, it was revealed that the local elected prosecutor, Linda Tally-Smith, did not provide exculpatory evidence to the defense and was having an affair with the lead detective. A special prosecutor is looking into Tally-Smith’s actions.
Report: 20 Fed Prosecutors Ignored Smart-on-Crime Initiative: A new report by the U.S. Department of Justice’s Office of the Inspector General concludedthat at least 20 of the country’s 94 federal districts did not follow the Obama administration’s “Smart on Crime” recommendations to reduce the number of mandatory minimum sentences imposed in drug cases. That report recommended several steps to increase compliance with Department-wide policies, including updating the U.S. Attorney’s Manual as necessary to accurately reflect charging policies. While the so-called Holder Memo that set forth those charging and sentencing policies in 2013 has been superseded by a recent memo issued by now-Attorney General Jeff Sessions, the proposals in the report could be used to increase federal prosecutors’ adherence to Sessions’s new policies.
The Nation's Top Government Ethics Official Has Resigned: Walter Shaub, Jr., the director of the U.S. Office of Government Ethics, has resigned. He served in that office under three presidents, and made several recommendations for changes to office he led since 2013—some of which may be of interest to other ethics boards.
State-Level Anticorruption Commissions: What the U.S. Can Learn from Australia’s Model: Australia has had state-level anticorruption agencies for nearly thirty years, some of which have been quite successful. A law student writing on the Global Anticorruption Blog suggests that Australia’s model might work well for states in the United States.
Public Officials Should be Required to Disclose Their Cryptocurrency: A piece on the FCPA Blog written by a law student proposes that public officials should be required to disclose their ownership of cryptocurrencies like Bitcoin.
Preet Bharara Has the Supreme Court to Thank for Letting Sheldon Silver Go Free: In a New York Magazine article, the author correctly analyzes the distinction that judges are drawing between politicians’ acts that are merely “distasteful” and those that are illegal, given the “official acts” requirement the Supreme Court set forth in McDonnell. Elsewhere, writers speculate about whether McDonnell and Silver will inspire Congress or state lawmakers to amend statutes that criminalize politicians’ abuse of their offices, and bemoan the Silver reversal.
Guest Post: Using Open Data To Combat Corruption—Moving Beyond the Hype: The Open Data Charter and its partners have pulled together a guide to using open data to combat corruption. The guide includes the datasets that its authors believe are most important to have access to and compare to search for patterns that might suggest corruption, including registers that contain information about lobbyists, companies, and charities; lists of government contractors; government budgets; grants provided by the government to individuals or organizations; and politicians’ voting records. The list of datasets may itself provide corruption fighters—particularly prosecutors and criminal investigators—with some good ideas about relevant data to access and analyze. The Open Data Charter and its partners will next “road-test” the “assumptions underlying the guide” in several countries (including Mexico) to “make the guide as useful as possible.”
Brazil's Lula Sentenced to Prison on Corruption Charges: The former president of Brazil has been sentenced to nine-and-a-half years in prison on corruption charges. Luiz Inacio Lula da Silva—better known as “Lula”—was sentenced on charges of laundering money and graft by the same judge who is heading Operation Carwash. The verdict and sentence reduce the chance that Lula’s Workers’ Party regains control over Brazil in the 2018 elections. With this one case resolved, Lula faces four additional corruption-related trials. (Our readers who are fluent in Portuguese may be interested in the judge’s written sentence, which includes Judge Sergio Moro remarking, in substance, that no one is above the law.)
Appellate Court Ruling Shows Canada's Anti-Bribery Law has Teeth: The conviction of Nazir Karigar, who was found guilty at trial of violating Canada’s Corruption of Foreign Public Officials Act, has been affirmed. The Act has been in place since 1998, but—according to the article—has resulted in only three previous convictions against companies that pled guilty and the conviction of one individual, Karigar. In affirming Karigar’s conviction, the Ontario Court of Appeal applied standards similar to those used in federal conspiracy cases in the United States, concluding that the prosecutors needed to only prove that Karigar agreed to offer a bribe to a foreign official—not that such a bribe was actually offered.
Mexico’s Violence Spikes, Fueled by Drug Trafficking, Kidnapping, Corruption: After a decade of reduced violence and corruption, homicides in Mexico surged by 255 percent from 2015 to 2016. This article places at least part of the blame on “unveiling of widespread corruption at the federal, state, and local levels, and a lack of substantive judicial reform.”
Microsoft’s Default Font is at the Center of a Government Corruption Case: In an investigation of Pakistan Prime Minister Nawaz Sharif, investigators cleverly determined that certain documents were forged by examining the font that was used to create them. Sharif and his family produced exculpatory documents they said had been prepared in 2006; as they are typed in Calibri, a font that was not available until 2007, it appears that those documents are a sham. Not long after the documents were determined to be forged, the Pakistan Supreme Court ruled that Sharif was disqualified from being prime minister as a result of the corruption allegations, and Sharif stepped down. The allegations against Sharif and three of his children stem from disclosures in the Panama Papers that revealed that the children owned expensive residential property in London.
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 firstname.lastname@example.org.