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

CEPI Newsletter August 2020

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 Tuesday, August 4, 2020, from 2:00-3:15 p.m. ET, CEPI will host Unemployment Insurance Fraud: Trends, Tools, Prevention, and Enforcement, the first webinar of its COVID-19 Frauds Series. Register here for this free webinar, which is available only to government attorneys and law enforcement. Speakers include state and federal prosecutors, the director of the National Association of State Workforce Agencies Unemployment Integrity Center, and an agent from the U.S. Department of Labor Office of the Inspector General.

Corruption

            State

Kansas Congressman Steve Watkins Charged with Voter Fraud: The Shawnee County (Kansas) District Attorney’s Office has charged Congressman Steve Watkins with voter fraud during the November 2019 election. Watkins faces three felony charges: interfering with law enforcement by providing false information, voting without being qualified, and unlawful advance voting. He's also been charged with failing to notify the state department of motor vehicles that he changed his address, a misdemeanor. Watkins has stepped down from his committee assignments.

Is New York Better Suited Than the Feds to Prosecute Public Corruption?: A local prosecutor in New York compares recent decisions by the U.S. Supreme Court and by the New York Court of Appeals—the state’s highest court—to conclude that state law is more favorable for the prosecution of corruption.

Puerto Rico Governor, Others Face Formal Corruption Probe: Puerto Rico Governor Wanda Vazquez will be investigated by the territory’s Special Independent Prosecutor’s Panel. This follows a referral by the territory’s Secretary of Justice—the equivalent of the attorney general—to the panel. Around the time that referral was made, Governor Vazquez fired the Secretary of Justice.

            Federal

2 Sentenced for Concealing Hundreds of Thousands of Dollars in Corporate Contributions to U.S. Senate Campaign: Gerald G. Lundergan and Dale C. Emmons, both of Kentucky, were sentenced in connection with a multi-year scheme to funnel more than $200,000 in unlawful campaign contributions into a U.S. Senate campaign and conceal those contributions from the Federal Election Commission. Lundergan was sentenced to 21 months in prison and a fine of $150,000. Emmons will serve nine months of his three years of probation in a halfway house and pay a $50,000 fine.

Sheldon Silver, Former N.Y. Assembly Speaker, Will Finally Go to Prison: Two trials, three sentencing hearings, multiple appeals, and more than five years after charges were first filed against him, former New York State Assembly Speaker Sheldon Silver has been ordered to report to prison to serve his 78 month term.

Who Are the Characters in the Ohio Statehouse Corruption Scandal? This Week in the CLE: A 30-minute podcast discusses the federal criminal case against Ohio House Speaker Larry Householder, lobbyists Matt Borges, Neil Clark, and Juan Cespedes, and others. The men are among those charged in connection with a $60 million bribery case involving FirstEnergy, a nuclear power company.

Ex-Philadelphia Congressman Ozzie Myers Charged with Ballot Box Stuffing, Bribery: A former Pennsylvania congressman is facing bribery, obstruction of justice, conspiring to violate voting rights, and other charges. The defendant, Michael “Ozzie” Myers, was convicted of federal charges in the early 1980s and expelled from the U.S. House of Representatives after accepting a $50,000 bribe in connection with Operation Abscam.

West Virginia Woman Pleads Guilty to Fleeing to Mexico With Classified National Security Document, Kidnapped Daughter: Elizabeth Jo Shirley, a former intelligence community contractor from West Virginia, pled guilty to fleeing to Mexico with classified materials and with her minor daughter, over whom she did not have custody. Shirley sought to provide the classified information to the Russian government.

Resources

A Resource Guide to the U.S. Foreign Corrupt Practices Act, Second Edition: The U.S. Department of Justice and Securities and Exchange Commission have updated the Resource Guide to the Foreign Corrupt Practices Act. The guide describes the factors that the DOJ and SEC weigh when determining whether to open an investigation or charge a case, as well as guidance about other topics, including who and what the FCPA covers and the types of criminal and civil remedies the federal government may seek. This guide may be of interest to other enforcers looking to develop internal or external guidance for enforcement actions, or to anyone looking for an overview of potential DOJ or SEC resolutions for any kind of criminal or civil case. A law firm summarizes the guide and the updates it makes to the first edition.

Ethics

Homeland Security Dept. Admits Making False Statements in Fight with N.Y.: Federal prosecutors in New York have disclosed in a letter that federal officials made misstatements in connection with a lawsuit filed by the New York Attorney General’s Office and others. Those misstatements so undercut the arguments that were being made to exclude New Yorkers from the Trusted Traveler Programs (TTP) that the federal government restored their access to the TTP.

Sanctions Verdict Nixed After Feds' Conduct Questioned: Southern District of New York Judge Alison Nathan has dismissed the case against Iranian businessman Ali Sadr Hashemi Nejad. The defendant had been convicted at trial in March, but the government requested dismissal of the case after various “disclosure-related issues.”

Ethics

Summit County Prosecutor's Office Transferring All Police Use-of-Force Investigations to Ohio AG: The Summit County (Ohio) prosecuting attorney will transfer all police use-of-force cases to the Ohio Attorney General’s Office. The elected prosecutor said the move was to ensure the incidents were reviewed by an agency that does not work closely with the officers whose conduct will be scrutinized.

Former Penn State General Counsel Reprimanded Over Sandusky Grand Jury Representation: Former Pennsylvania State University (PSU) general counsel Cynthia Baldwin was publicly reprimanded in a live YouTube stream by the Pennsylvania Supreme Court’s disciplinary board. Baldwin had represented three PSU-affiliated individuals who testified before a grand jury in connection with the Jerry Sandusky child abuse investigation. Disciplinary counsel criticized her concurrent representation of clients with potential conflicting needs and disclosure of privileged information when she, herself, testified—matters that were addressed in a written opinion that was issued in February. Baldwin disputes the findings, which followed a lengthy decision by a lower panel finding that she had fully apprised her clients (who, she argues, themselves obscured the conflict by lying to her) and had a right to testify before the grand jury to make it clear that she had not joined in efforts by her clients to lie to prosecutors.

International

Godmen or Conmen? How India’s Religious Trust Laws Facilitate Money Laundering Empires: The Global Anticorruption Blog looks at the phenomenon of “godmen” in India who have amassed millions—and sometimes billions—of dollars from their followers. The piece argues that India’s religious trust laws provide loopholes that allow these “godmen” to engage in a number of illicit, corrupt schemes.

Swiss Prosecutor’s Resignation Strikes at Heart of Country’s Legal System: Switzerland’s Federal Prosecutor, Michael Lauber, has resigned after facing several investigations into his conduct during the FIFA soccer investigation. Lauber had off-the-record meetings with FIFA President Gianni Infanito and others involved in similarly high-profile cases, and contacts with senior Russian law enforcement officials that “raise concerns.” The supervisory body that oversees his actions alleged those actions, and his lack of candor about them, “seriously violated his official and legal duties” and damaged the reputation of his office. 

COVID-19

Enforcement

            State

Coronavirus Fraudsters Keep Prosecutors Busy: An article summarizes some of the state and federal enforcement actions and warns consumers about some red flags.

Nevada COVID-19 Task Force Provides Guidance for Victims of Unemployment Benefits Fraud: The Nevada Attorney General’s Office has joined with the District of Nevada’s U.S. Attorney’s Office to warn the state’s residents about unemployment benefits fraud and other COVID-19-related schemes.

            Federal

U.S. Attorney Announces MOU with Special Inspector General for Pandemic Recovery: The Special Inspector General for Pandemic Recovery (SIGPR) has entered into a Memorandum of Understanding with the U.S. Attorney’s Office for the Eastern District of Virginia to develop a cooperative effort to investigating and prosecute matters related to the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The MOU outlines four objectives, including providing a coordinated response to CARES Act-related fraud, linking CARES Act-related complaints to larger criminal schemes, and deterring CARES Act-related fraud by publicly investigating and prosecuting wrongdoers.

LA Man Accused of Fraudulently Obtaining $9M in PPP Loans, Spending Hundreds of Thousands Gambling in Vegas: Andrew Marnell is accused of fraudulently obtaining more than $8 million in Paycheck Protection Program (PPP) loans for several companies, including by using aliases and submitting fake and altered documents. Federal prosecutors in California allege that he used the PPP funds he received to gamble and invest in the stock market.

Houston Man Accused of Stealing $1.1 Million in COVID Small Business Relief: Joshua Thomas Argires has been charged with PPP fraud after he filed two loan applications seeking over $1.1 million for Texas Barbecue and Houston Landscaping. Argires allegedly inflated the number of employees and amount of wages, and spent none of the money he received on qualifying, business-related expenses.

Former Employee Discovers PPP Fraud at Trucking Company And Calls FBI: Owner And Controller Now Face 20 Years: The owner of a trucking company in Utah faces charges after allegedly lying in a PPP loan application and misusing the funds he received under the program. Hubert Ivan Ugarte and Lisa Bradshaw Rowberry are alleged to have submitted an application for Frisbu Trucking, Ugarte’s business, that did not disclose that Ugarte was facing unrelated federal charges for bribing employees at Salt Lake City’s FedEx Hub. The PPP fraud was discovered after an ex-employee contacted the FBI.

Washington, D.C. General Contractor Oludamilare Olugbuyi Charged with COVID-Relief Fraud: The Washington, D.C.-based owner of a construction company has been charged with submitting false documents to a bank that sought over $400,000 in PPP loans. Oludamilare Olugbuyi allegedly used false social security numbers on the form and claimed a 2019 adjusted gross income of over $175,000. However, in mid-April 2020, he submitted an IRS Form 1040 that reported he received only $1 in 2019—which qualified him for the CARE Act’s $1,200 economic impact stimulus payment.

Eastside Tech Executive Took $5.5M in Fraudulent PPP Loans, Feds Allege: Mukund Mohan, a former Amazon and Microsoft executive, is facing federal charges in Washington that allege he defrauded the PPP by using six shell companies he controlled to apply for benefits to which he was not entitled. Mohan allegedly purchased one company on the internet from an entity that specializes in “aging” shell corporations so they appear to be legitimate.

Tools

FinCEN Advisory on Imposter Scams and Money Mule Schemes Related to Coronavirus Disease 2019 (COVID-19): The Financial Crimes Enforcement Network (FinCEN) has released an advisory that provides information on some COVID-19 imposter scams and money mule schemes targeting banks. The advisory includes several red flags that may also be of use to prosecutors and others investigating COVID-19-related schemes.


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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