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

CEPI Newsletter December 2019

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.

Corruption Cases

State

Teacher Sentenced to 17 Years After Covertly Filming Kids in Summer Camp Bathroom for Child Porn 'Music Video': The New Jersey Attorney General’s Office announced a lengthy sentence for a teacher who pled guilty to child pornography charges. The teacher had been arrested in a 2016 multi-defendant cyber investigation of child pornography, which led to evidence of manufacturing of child pornography and criminal conduct against children under the defendant’s supervision.

Criminal Case Against Ex-DA Abelove Can Go Forward, Court Rules: In July 2015, in response to multiple incidents where police officers caused the death of unarmed civilians, the New York Governor issued an executive order appointing the New York Attorney General’s Office as special prosecutor in such cases. A NY appellate court recently reinstated an indictment against Joel Abelove, Rensselaer County District Attorney, who responded to an incident in 2016 where an officer shot and killed an otherwise unarmed civilian who was in a vehicle, by retaining county jurisdiction, impaneling a grand jury to determine if the use of force was justified, and allegedly committing official misconduct and perjury in connection with that grand jury, which returned a “no true bill.” The New York Attorney General’s Office, through another executive order, was authorized to investigate and prosecute any unlawful acts arising out of the shooting or subsequent investigation and subsequently indicted Abelove for official misconduct and perjury. Abelove obtained a dismissal for lack of jurisdiction. The appellate court reversed the trial court and reinstated the indictment, finding the Attorney General’s Office had authority under a combination of statute and executive order.

Ex-Executives Ran JFK Airport Bribery Scheme, NY AG Says: The New York Attorney General’s Office has indicted a former British Airways executive and the former CEO of an airport ground-services company on bribery and money laundering charges for a pay-to-play scheme. The ground-services company executive allegedly paid millions of dollars in bribes to the British Airways executive in exchange for a ground-handling services contract at JFK Airport’s Terminal 7. The indictments are part of a broader investigation called “Operation Greased Runway,” which has led to several previously announced settlements covering other participants accused of taking kickbacks or dodging New York taxes.

Most Priests Accused of Sexually Abusing Children Were Never Sent to Prison. Here's Why: Despite widespread scrutiny, major church reform establishing guidelines for dealing with allegations of sexual abuse, and dioceses releasing lists of credibly accused priests, most priests have never faced criminal prosecution. Statutes of limitation in many states prevent prosecution or civil suits against credibly accused priests. In an effort to address this issue, some states, such as Connecticut, Arizona, and New Jersey, have eliminated or changed statutes of limitation—although these amendments will apply only to new criminal acts. Additionally, there is no standard definition of “credibly accused” for lists created by dioceses, so victims’ advocates urge state attorneys general to undertake independent investigations similar to the one conducted by the Pennsylvania Attorney General’s Office.

Federal

Feds Allege State Rep. Luis Arroyo Caught on Undercover Recording Paying $2,500 Bribe. ‘This is the Jackpot’: Illinois State Representative Luis Arroyo was charged with federal program bribery alleging he agreed to pay a state senator $2,500 per month in kickbacks in exchange for the senator’s support for legislation involving video gambling sweepstakes games that would have benefited one of Arroyo’s paid lobbying clients. The charges against Arroyo are part of a broader federal investigation of Illinois state government.

Illinois State Sen. Martin Sandoval Resigning Amid Federal Probe: Illinois State Senator Martin Sandoval has resigned amid a federal investigation into his relationship with energy utility ComEd and its parent company Exelon. Sandoval was a member of the Energy and Public Utilities Committee. He has received $26,250 in donations from ComEd since 2007.

Louisiana Businessmen Ensnared in Mississippi Prison Corruption Case Await Sentencing: A federal criminal investigation by the FBI and federal prosecutors in Mississippi called “Operation Mississippi Hustle” has resulted in guilty pleas from a father and son, Michael LeBlanc Sr. and Michael LeBlanc Jr., who bribed Mississippi officials in order to obtain contracts for their services in Mississippi prisons. They pleaded guilty to conspiring to defraud the United States. Mississippi’s former corrections commissioner, Christopher Epps, cooperated with federal investigators to allow them to record his conversations with vendors offering him bribes. Epps is now serving a nearly 20-year sentence.

U.S. Attorney Announces the Arrest of 27 Individuals, Including NYPD Employees, for a Massive Bribery Scheme Relating to No-Fault Automobile Insurance Policies: The U.S. Attorney’s Office for the Southern District of New York, the Westchester District Attorney’s Office, the New York State Police, the National Insurance Crime Bureau, New York State Department of Financial Services, and the Federal Bureau of Investigation investigated a multimillion dollar bribery scheme culminating in the arrest of 27 individuals, including five 911 operators and a uniformed police officer employed by the New York City Police Department. The scheme involved a criminal enterprise using New York and New Jersey no-fault automobile insurance to earn millions in illegal profits. Members of the enterprise bribed employees of federally funded hospitals, the NYPD, and other entities in exchange for providing protected, confidential personal and health information about recent motor vehicle accident victims. The criminal enterprise used that health and personal information to contact the victims and steer them toward using specific medical and legal service providers. Those medical and legal providers then received payment from insurance companies directly and kicked back a portion of the payment to the criminal enterprise. The scheme resulted in improper disclosure of confidential information for approximately 60,000 people.

A Bag of Sex Toys, an Alleged Cover-Up and an Ex-D.A. on Trial: The District Attorney in Suffolk County New York, Thomas J. Spota, went on trial for attempting to cover up an assault on a handcuffed suspect by the Suffolk County Police Chief James Burke. Federal prosecutors allege that Spota and his deputy pressured potential witnesses not to cooperate with a federal investigation into the assault. The police department had long faced allegations of coerced confessions and abuses of power.

U.S. Attorney’s Office Announces Opportunity for Victim Input to Court in Pending Motion by Bernard J. Ebbers For Sentence Reduction: In 2005, Bernard J. Ebbers was sentenced to 25 years in prison for a securities fraud scheme relating to WorldCom. In September 2019, Ebbers filed a motion to reduce his sentence and be immediately released due to medical conditions and advanced age under the First Step Act. The judge provided an opportunity for victims and others to express their views regarding the motion.

FBI Arrests Puerto Rico Senator, 7 More in Corruption Probe: The U.S. Attorney’s Office for the District of Puerto Rico indicted and arrested Puerto Rico Senator Abel Nazario-Quiñones and seven other individuals for theft or bribery concerning programs receiving federal funds. Nazario-Quiñones previously served as the mayor of a municipality. The alleged bribery involved Nazario-Quiñones and others in the mayor’s office using municipal funds for the purpose of working on Nazario-Quiñones’s senatorial campaign.

Texas Judge Indicted for Wire Fraud Suspended Without Pay: A state district court judge in Houston, Alexandra Smoots-Thomas, was suspended without pay Tuesday by the Texas State Commission on Judicial Conduct, four days after pleading not guilty to federal charges that she used campaign funds for personal expenses.

Professor Who Is Corruption Expert Accused of Laundering $2.5 Million: University of Miami Professor Bruce Bagley, an expert on money laundering and corruption in South America, was indicted on money laundering charges for involvement in a scheme to hide the origins of more than $2.5 million in proceeds from bribery and corruption in Venezuela. Over the years, Bagley had been quoted in media reports about drug trafficking and money laundering and had edited books and taught college courses on the subject.

Ethics

Judge's Concern About Lawyers Liking Him Sometimes Interfered with Ethics Compliance, Commission Says: The California Commission on Judicial Performance has concluded that Contra Costa County Judge John Laettner should be removed from the bench for “a significant amount of misconduct.” That misconduct included inappropriate comments about women’s looks, and an apparent desire to “have certain attorneys like him and not be upset or ‘mad at him’ about his rulings” that sometimes caused him not to comply with the canons of judicial ethics.

Prosecutor Used Daughter as Bait to Catch Molester: The California Attorney General’s Office has taken over prosecution of a molestation case in Santa Clara, California, because of conflicts of interest in a case involving molestation of the county prosecutor’s daughter. The child had been molested while walking on a public trail, and police began investigating. The county prosecutor, separate from the police investigation, arranged for his daughter to walk again on the trail to catch the suspect in the act of attempting to touch her. She was to keep in contact with her father via cell phone. The suspect was arrested for molestation. The prosecutor is under scrutiny for possible child endangerment.

3 Judges, Including 2 Who Were Shot, Receive Short Suspensions for White Castle Altercation: Three Indiana judges have been suspended from the bench for their roles in a late-night fight in a White Castle parking lot this spring. Clark County Judges Andrew Adams and Bradley Jacobs, and Crawford County Judge Sabrina Bell, were imposed suspensions without pay ranging from one to two months. In the incident, Bell “raised her middle finger” at two men who were in a car nearby after those men shouted something at the group. Those two men then drove into the parking lot and got out of their vehicle. As the Indiana Supreme Court phrased it, “A heated verbal altercation ensued, with all participants yelling, using profanity, and making dismissive, mocking or insolent gestures toward the other group.” The fracas ended when one of the other men, who the male judges had on the ground, shot Adams and Jacobs. The Indiana Supreme Court said all three judges “engaged in judicial misconduct by appearing in public in an intoxicated state and behaving in an injudicious manner and by becoming involved in a verbal altercation.” Adams was separately charged and convicted of misdemeanor battery in connection with the incident.

Why 7 Police Officers Were Blacklisted in Brooklyn: Brooklyn District Attorney Eric Gonzalez made public a list of police officers that he will no longer call as witnesses because he has determined they are not credible. For decades, prosecutors in New York had kept confidential lists of officers with disciplinary or credibility problems, but the lists had never been made public. Gonzalez said he released the list in order to promote transparency and faith in criminal justice.

Court Ponders Discipline Against Penn State Case Prosecutor: The Pennsylvania Office of Disciplinary Counsel (ODC) argued to Pennsylvania’s highest court that former state prosecutor Frank Fina should have his law license suspended for one year because he obtained grand jury testimony by then-Penn State general counsel Cynthia Baldwin about three top university officials involved in the Jerry Sandusky 2012 child molestation trial. Baldwin was called to testify three months after Sandusky was convicted because Fina was seeking to charge other university officials for their role in failing to stop Sandusky. The ODC told the court that Fina violated a rule against prosecutors issuing subpoenas without a judge's approval to get information from lawyers about their current or former clients. Fina’s lawyer argued that the subpoena was signed by the acting Pennsylvania Attorney General at the time and was put before the grand jury supervisory judge.

‘Bad Writing Does Not Normally Warrant Sanctions, But We Draw the Line at Gibberish’: The Seventh Circuit ordered an attorney to show cause why he should not be sanctioned for filing an incoherent brief in support of an appeal by a previously pro se claimant. The “bizarre” appellate brief had “no basis in the record” and “no basis in the law.”

Resources

Aggressive Criminal Law Enforcement Is Insufficient to Combat Systemic Corruption. But That Doesn’t Mean It’s Not Necessary: Although punishing individual wrongdoers is necessary to combat systemic corruption, it is not sufficient. Widespread corruption is generally the product of systems, institutions, and cultures that create the incentives and opportunities to behave corruptly. Without addressing these root causes of corruption, even the most aggressive anticorruption enforcement efforts will be ineffective. But recognizing the importance of structural reform shouldn’t obscure the fact that effective enforcement of anticorruption laws, and the imposition of individual accountability, is also a vital part of the anticorruption agenda.

Government Integrity Holds Key to Tackling Corporate Corruption—Study: Financial incentives and criminal punishment will not root out corrupt business practices, but a government culture of honesty, integrity, and strong leadership could help to cure corruption.

Political Corruption Isn't Just Wrong, It Also Devalues Business, ASU Study Finds: Companies located in areas with high levels of political corruption were found to be worth less than similar companies in low-corruption areas, according to recent research by an Arizona State University professor.

FinCEN Reissues Real Estate Geographic Targeting Orders for 12 Metropolitan Areas: The Financial Crimes Enforcement Network (FinCEN) today announced the renewal of its Geographic Targeting Orders (GTOs) that require U.S. title insurance companies to identify the natural persons behind shell companies used in all-cash purchases of residential real estate. The purchase amount threshold remains $300,000 for each covered metropolitan area. The new GTOs will not require reporting for purchases made by legal entities that are U.S. publicly-traded companies.

Advisory on the Financial Action Task Force-Identified Jurisdictions with Anti-Money Laundering and Combating the Financing of Terrorism Deficiencies and Relevant Actions by the United States Government: The Financial Action Task Force updated its list of jurisdictions with strategic anti-money laundering and combating the financing of terrorism (AML/CFT) deficiencies. The changes may affect U.S. financial institutions’ obligations and risk-based approaches with respect to relevant jurisdictions.

International

Italy’s Statute-of-Limitations Reforms: A Helpful but Incomplete Step Toward Ending Impunity: In December 2018, Italy adopted a new anticorruption law called Spazzacorrotti (“Bribe Destroyer”). Among other provisions, the new law amends statutes of limitations, which previously allowed corrupt officials to escape punishment. Under the traditional criminal process, defendants are entitled to two appeals, which must be resolved before the defendants begin serving their sentences, and the statute of limitations clock keeps ticking while these appeals are in process. Combined with a very slow pace of proceedings, this system allowed Silvio Berlusconi, Giulio Andreotti, and other politicians to escape any actual punishment for corruption. Among other changes, the new law tolls the statute of limitations once the court of first instance renders its judgment so appeals cannot be used to run out the clock.

Will ‘Civilized States’ End the Scourge of Red Notices?: The 194 member countries of Interpol can each request Red Notices, but Russia is behind more than one third of all Interpol Red Notices. A Red Notice alerts police to an internationally wanted fugitive, and requests that law enforcement locate and provisionally arrest the individual pending extradition. Independent NGOs have documented that some countries, including Russia, have abused Red Notices for activities of a political character. Because the mere existence of a Red Notice against a person can result in lost jobs, revoked bank accounts, and lost travel visas, some lawmakers in the United States and elsewhere are working toward ending abuse of Red Notices.

Essential Reading for Enforcers: The EIB Fraud Investigation Unit and CPS Inspectorate Reports: Two recent reports, one by the European Investment Bank’s Fraud Investigation Unit and a second by the Inspectorate of the United Kingdom’s Crown Prosecution Service, offer a wealth of data, analysis, and tips from which anticorruption enforcement agencies can profit. For example, the EIB’s Proactive Integrity Reviews (PIRs) found that, of the 27 projects subjected to a PIR, five (almost 20 percent) had misused funds.

Former Braskem CEO Charged with FCPA and Money Laundering Conspiracies: The United States Department of Justice indicted Jose Carlos Grubisich, a Brazilian citizen and former CEO of Braskem S.A., for conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA), conspiracy to violate the FCPA’s books and records provisions and falsely certifying financial reports, and conspiracy to commit international money laundering. Prosecutors alleged that from 2002 to 2014, Grubisich and other former Braskem employees diverted about $250 million from Braksem and related companies for a secret slush fund used to bribe politicians and political parties.

The Charges Against Israeli Prime Minister Benjamin Netanyahu, Explained: Israel’s Attorney General formally charged Prime Minister Benjamin Netanyahu with bribery, fraud and breach of trust. Netanyahu has denied all allegations. The most serious charge is that between 2012 and 2017, Netanyahu had a quid pro quo arrangement with a tycoon, Shaul Elovitch, who owned a telecom company and popular news website in which Netanyahu wanted favorable coverage. Specifically, Netanyahu allegedly pushed to approve a lucrative merger for the telecom company, resulting in a gain of roughly $500 million for the company, in exchange for favorable media coverage during two general elections. Netanyahu has publicly argued that his decisions about the merger were supported by ministry staff, but critics argue that support of the merger approval by professional staff would not make the bribery exchange less corrupt. A second charge accuses Netanyahu of agreeing with Arnon Mozes, the owner of Israel’s best-selling daily newspaper, to push to limit the circulation of a rival newspaper in exchange for more positive coverage. A third charge, Case 1000, accuses Netanyahu of receiving a supply line of gifts from Arnon Milchan, a film mogul, and Australian billionaire James Packer in exchange for favors from the prime minister. The investigation of the case has given rise to media accounts that police may have pressured key witnesses to become state’s witnesses, which is an approach at least one commenter discourages.

U.S. Blacklists Former Kenyan Attorney General Over Corruption Allegations: The United States on Monday imposed sanctions on Kenya's former attorney general, Amos Sitswila Wako, accusing him of involvement in "significant" corruption, according to a statement from U.S. Secretary of State Mike Pompeo.

UK’s New ‘Freeze and Seize’ Powers Upheld in Moldovan Money Laundering Case: A UK Crown Court judicial panel dismissed the first ever appeal of an Account Forfeiture Order brought by Vlad Luca Filat, the son of former Moldovan Prime Minister Vladimir Filat. Vladimir Filat is serving nine years in a Moldovan jail for his role in the theft of $1 billion from the central bank of Moldova in 2014. In February, the UK’s National Crime Agency successfully applied for Vlad Luca Filat to hand over nearly £500,000 ($644,000) frozen from three HSBC bank accounts. Vlad Luca Filat tried to claim unsuccessfully that these payments were gifts from friends.

Will the Swiss Condone Torture in the Rush to Return Assets to Uzbekistan?: Swiss authorities are holding hundreds of millions of dollars in bribes paid to the former president of Uzbekistan’s daughter, Gulnara Karimova. The bribes were paid by telecom companies in exchange for granting of mobile phone licenses, and were deposited into Swiss accounts. Swiss prosecutors opened a money laundering case against Karimova and made clear that the laundered funds would be returned to Uzbekistan if Karimova and accomplices were found guilty. An accomplice of Karimova, while detained in an Uzbekistan prison, signed an order confessing to her role in the scheme and giving up any claim to the funds. That confession opens the possibility of returning the funds to Uzbekistan, but also may have been the product of torture, according to the accomplice’s cell mate. This article suggests that Switzerland should avoid returning funds to the Uzbekistan government, which has a poor record on human rights, until any suggestion of torture can be dispelled.

1 in 2 Indians Paid a Bribe at Least Once in the Past Year, Survey Finds: Corruption remains "part and parcel of daily life in India," said Transparency International India. It is particularly widespread in local-level citizen services, such as property registration and land issues, which are "ridden with bribery and kickbacks."


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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