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

CEPI Newsletter March 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.

Spotlight: Corruption & the Coronavirus

Compliance Pros Face Risk Dilemmas from Coronavirus: At the FCPA Blog, former federal FCPA defendant and cooperating witness—and current compliance speaker—Richard Bistrong draws parallels between his rationales for decisions that resulted in his prosecution and his initial instincts to keep his travel itinerary, which involved international travel and meetings, even as the risks of such travel went up. Both, he argues, are examples of sunk-cost bias and escalation of commitment, which “lead us to continuing a path where we have invested time and resources, and that the closer we are to the finish line, be it a sales goal, deadline, or in my case, a very robust travel schedule, the more risk we might be willing to take to get there.”

Addressing Anti-Corruption Risks from the Coronavirus: The Vice President of Anticorruption and Global Trade within the Ethics & Compliance Office of Hewlett Packard Enterprise warns that the coronavirus may increase the risk of bribery and corruption by causing pressure on salespeople to meet their sales targets and the reduction of anticorruption as a priority for businesses facing financial losses. She suggests several common-sense approaches for businesses to reduce the risk of noncompliance and corruption.

There is No Covid-19 Defense to Corruption: Compliance professionals provide suggestions about effective mechanisms to reduce the chance of corruption while working remotely, and when post-quarantine business activity returns. While their advice is geared toward other compliance professionals, much of it may be applicable to government attorneys who represent agency clients and/or enforce the law.

Corruption Cases

State

Misconduct Charges Against Contra Costa Assessor Would Be Dropped If He Wins Supervisor Election: Contra Costa, California, County Assessor Gus Kramer, who is facing civil charges of willful or corrupt misconduct and creating a hostile work environment, will (perhaps counterintuitively) have the charges against him dropped if he is elected to a seat on the Contra Costa Board of Supervisors. This is because the only punishment Kramer faces is removal as county assessor; if he is elected to a new position, he apparently cannot be removed from it and will keep his government paycheck.

ANALYSIS: Can Delaware Cancel My Company?: An article on Bloomberg Law details the powers of the Delaware Attorney General’s Office to request dissolution of a business entity when its owners abuse or misuse the entity’s powers or privileges. The article notes that other states—including Kansas, Missouri, and Oregon—grant similar powers to their own attorneys general, and that the Delaware attorney general has instituted such proceedings against at least 15 Delaware entities.

Florida Woman Changed Voters’ Party Affiliations, Officials Say: Florida resident Cheryl Hall has been charged with filling out voter forms with false information after she changed the party affiliation of several voters without their consent. The scheme came to light after several voters contacted the office of the local supervisor of elections complaining that they had received cards stating that their party registration had been changed, even though they had not changed it. Hall faces up to five years in prison and a $5,000 fine on each charge.

Superior Court Judge Crawford to Resign After Guilty Plea to Theft by Taking: Griffin (Georgia) Judicial Circuit Judge Robert “Mack” Crawford has entered an Alford plea to a charge of theft by taking and been sentenced to 12 months of probation. Crawford had been previously investigated by the state Judicial Qualifications Commission, on the same incident involving the theft of nearly $16,000 from the registry of the Pike County Superior Court. Crawford remained on the bench for several weeks after entering his plea, however, raising concerns that he might misuse his access to court files.

Amid Corruption Investigations, Some Look to Give Illinois’ Attorney General More Power to Investigate: In the wake of several high-profile federal cases against politicians in Illinois, the state legislature is discussing providing tools that would provide the Illinois Attorney General’s Office with additional powers to investigate and prosecute corruption.

Jurors Will Visit Site of Alleged Off-Duty Cop Brawl Outside Nathan Bill’s in Springfield: Five suspended Springfield, Massachusetts police officers and an owner of a bar called “Nathan Bill’s” are scheduled to be tried on charges associated with a late-night fistfight outside that same bar in 2015. The six are alleged to have beaten four civilians after one of those civilians whistled at another officer, a woman one of the defendants was dating. The female officer and several others are also charged separately with engaging in a cover-up to try to shield the trial defendants from discipline and prosecution. The Massachusetts Attorney General’s Office charged the case after local and federal prosecutors opted not to bring charges.

Newark Code Enforcement Officer Receives Sentence for Bribery: A case brought by the New Jersey Attorney General’s Office has resulted in a five-year prison sentence for a former Newark, New Jersey, code enforcement officer. Tajji Williams admitted he took bribes from a man seeking to operate an after-hours social club and agreed to resign his job and be permanently barred from public employment. For $5,000, Williams promised to notify the club owner of any planned law enforcement activity targeting his club and provide him with priority to file and receive building permits. The club owner eventually reported Williams to the New Jersey State Police and cooperated in the investigation, during which Williams accepted an additional $1,500 in bribes.

Philadelphia-Area Doctors Arrested In 'Massive' Pill Mill Bust: Doctors Emmanuel Okolo and Mohanad Faloouh have both been charged with running a massive illegal prescription operation in the Philadelphia area. The Pennsylvania Attorney General’s Office has charged the pair and their codefendants with, among other things, violating the state’s controlled substance act and Medicaid fraud.

Judge Allows Dead Witness' Testimony Against Collins: A trial court judge has ruled that prosecutors from the Pennsylvania Attorney General’s Office will be permitted to introduce the transcript of previous testimony by a woman who accused former Wilkes-Barre police officer Robert Collins of sexual assault. The witness, who died of an accidental drug overdose after testifying at Collins’s preliminary hearing, is one of eight women who alleged that Collins pressured them into sex.

Former South Carolina Sheriff Indicted for Alleged Public Corruption: Former Colleton County, South Carolina Sheriff Robert A. Strickland has been charged with misconduct in office and distribution of a controlled substance, embezzlement, and multiple ethics act violations. The South Carolina Attorney General’s Office alleges he committed a variety of improper acts, including requiring subordinates to work on home improvements at his residence and on his political campaign; coercing a subordinate into engaging in a sexual relationship with him; and illegally distributing prescription drugs and alcohol.

Federal Judge Dismisses Ex-Utah Attorney General Mark Shurtleff’s $80 Million Lawsuit: A federal judge has dismissed a lawsuit brought by former Utah Attorney General Mark Shurtleff against local prosecutors and law enforcement agencies who charged him and his successor with corruption-related offenses. The court concluded that police and prosecutors had qualified immunity as Shurtleff did not prove law enforcement lacked probable cause to charge and arrest him. Shurtleff has appealed the decision.

Virginia Law Prevents State Lawmaker from Being Arrested: Virginia House Delegate Chris Hurst was stopped by police on suspicion of driving under the influence, but not charged in part because of a provision in that state’s constitution that provides that legislators are immune from arrest while the General Assembly is in session “unless they have committed treason, a felony, or a breach of peace.”

Federal

Authorities Detail Charges Against Kauai Councilman, 11 Others in Meth Ring Investigation: Kauai County Councilman Arthur Brun and 11 others have been arrested and charged in Hawaii with drug trafficking, obstruction, and firearms offenses. Brun had been charged last fall with striking a police officer as he fled a traffic stop—a flight apparently motivated by the fact he had a pound of crystal methamphetamine in his vehicle, which he threw out of his car window as he drove off.

Ex-Baltimore Mayor Gets 3 Years In Prison For 'Healthy Holly' Children's Book Scheme: Former Baltimore, Maryland Mayor Catherine Pugh has been sentenced to three years in federal prison after pleading guilty to fraud, tax, and conspiracy charges over a scheme involving sales of her own self-published books. Pugh is also required to forfeit approximately $670,000, including a home she owned, and nearly $18,000 in her campaign account; and to pay restitution of $400,000 to the University of Maryland, which purchased 100,000 copies of her book at her urging, and $12,000 to the Maryland Automobile Insurance Fund, which also purchased her books.

Judge Tosses Convictions of Two Former Aides to Mayor Walsh in Boston Calling Case: A federal judge in Massachusetts has overturned jury verdicts that found Ken Brissette and Tom Sullivan, both former aides to Boston Mayor Martin J. Walsh, guilty of extorting union jobs from the organizers of a music festival. In its decision, the district court concluded that federal prosecutors “disregarded clear written rulings of the Court, misstated the law, mischaracterized the evidence, and invited jurors to convict the defendants based on theories the Court had expressly ruled out of the case” in the closing argument. The decision echoes the judge’s decision dismissing the case in 2018—a decision that the First Circuit reversed—and concludes that, in the alternative, a new trial is necessary.

The Bridgegate Case May Weaken a Powerful Legal Tool for Fighting Corruption in the United States: New Jersey’sBridgegate” case, under consideration by the Supreme Court after a January 2020 oral argument, may pose additional hurdles to federal prosecutors. The defendants in that case, both associates of former New Jersey Governor Chris Christie, argue that the Court should narrow the scope of 18 U.S.C. Section 666, which allows federal prosecutors to prosecute those who “knowing or intentionally misapply” federal funds over a certain amount. The commentator writing the piece argues, among other things, that if the Court limits the reach of Section 666, “the states can and should step up” to prosecute state-level corruption and abuse of power.

Turkey’s State-Run Halkbank Agrees to US Arraignment: After months of litigation at the district and circuit court levels, attorneys for Turkey’s state-run Halkbank are finally agreeing to formally appear in New York federal court so their client can be arraigned on charges it circumvented U.S. sanctions on Iran by moving billions of dollars of Iranian oil revenue.

Former Law Firm Client Pleads Guilty in Panama Papers Case: Harald Joachim von der Goltz, a former client of the now-defunct Mossack Fonseca law firm, has pled guilty in New York federal court to tax evasion, money laundering, and wire fraud-related crimes. Von Der Goltz’s co-defendant, Richard Gaffey, pled guilty days later. Two other men who were charged by U.S. prosecutors in the same case are facing charges in Germany and in Panama.

Ethics

Lawyers Should Weigh Risks and Ethics in Cloud Computing: The ABA recommends that lawyers carefully consider the pros and cons of storing data in the cloud.

Ex-FBI Director Can't Testify For VW Buyers In Emissions Trial: Former FBI Director Louis Freeh has been excluded as an expert witness for the plaintiffs suing Volkswagen over its false “clean diesel” claims. A California federal judge ruled that aspects of Freeh’s planned testimony would address things that were not material, and concluded that he had “serious questions” about the accuracy of the information on which Freeh was basing his opinions. During the hearing held to determine if Freeh would be permitted to testify, the auto maker’s current counsel pointed out that Freeh had multiple conversations with Volkswagen about representing it.

'Chastened' Atty Apologizes for Takeda, BakerHostetler Suit: A California attorney has asked a New York magistrate judge not to impose a six-figure sanction, which would financially hobble his family and his firm. In his objection to the court’s report and recommendation, Stephen M. Lobbin said he was “chastened” that he took on an old friend as a client and allowed that to impair his judgment and cause him to “over-plead” a run-of-the-mill breach-of-contract case by alleging the defendant violated federal racketeering statutes.

DC Breeds Another Outrageous Ethics Scandal: The FCPA Blog covers the investigation of former District of Columbia City Councilman Jack Evans, who resigned in January 2020 after his colleagues voted that he be expelled from office for using his position “on behalf of private clients who paid him hundreds of thousands of dollars, failing to recognize the conflicts and never properly disclosing the payments.” Just ten days after resigning, Evans filed paperwork to run for the seat he’d just resigned—a seat being filled through an expensive special election due to his abrupt resignation—and now is seeking public campaign money.

Ethics Panel Finds Grounds That Temple Terrace Mayor Exaggerated Degree: The Florida Commission on Ethics has found that Temple Terrace Mayor Mel Jurado misused her office by directing city employees to state on the city’s website that she received a doctorate from the University of Illinois. Instead, Jurado’s degree was from a diploma mill that the FBI closed down in 1996. The investigation apparently emanated from a 2018 news story that revealed the source of this degree, and that her claims to have received two master’s degrees were rebutted by the university she said issued them.

Daytona Attorney Who Used Trust Fund to Run Strip Club Disbarred: An attorney in Daytona, Florida, has been stripped of his license to practice law after he diverted funds from his attorney trust account to two different clubs that featured scantily-clad women. Brett Hartley told the media that he used his trust account because he could not find a bank that would allow him to open an account to service such an establishment.

Lawyer Is Suspended After He Is Accused of Misleading and Bullying Judge: A Georgia lawyer has been suspended by the Tennessee Supreme Court for misleading and bullying an administrative law judge during his representation of a methadone clinic. James Dunlap Jr.’s treatment of administrative law judge Kim Summers included him lying to her about the status of federal litigation and threatening her with a lawsuit, which he filed.

Hawaii Attorney General’s Office Hires Nationally Known Ethics Expert: The Hawaii Attorney General’s Office has created a chief integrity officer position and hired former U.S. Department of Justice compliance counsel Hui Chen to fill it. Chen will also be a member of that office’s new Complex Litigation, Fraud, and Compliance Unit, and her responsibilities will include internal training programs as well as ethics and conflicts reviews. Chen has written thoughtfully about the need for writers to avoid hyperbole and be intellectually rigorous, including the memorable line “I value precision as a matter of credibility….”

Missouri’s Prosecutors and Public Defenders are Drowning in Cases: In Missouri, both prosecutors and public defenders are working beyond capacity to address large caseloads. The director of the state’s public defender system notes that her attorneys are unable to represent every defendant who qualifies for appointed counsel, and the Missouri Association of Prosecuting Attorneys reported that line prosecutors were, on average, carrying more cases than the public defenders.

Lawyer Blasted by Judge For Conduct in Chevron Case Should Get His Law License Back, Ethics Referee Says: In the latest chapter in an over 25-year long saga involving multiple countries, multiple courts, multiple large oil companies, a tribe in Ecuador, and one very unhappy federal judge in Manhattan, a special referee appointed by the New York bar has recommended that Steven Donziger be permitted to resume the practice of law. Donziger represented the tribe in litigation in South America against Chevron, which resulted in a $9.5 billion judgment against the oil company; Chevron then filed a racketeering suit against Donziger in New York, resulting in a nearly 500-page opinion by Southern District of New York Judge Lewis Kaplan, who concluded that Donziger fraudulently procured the Ecuadorian judgment. Kaplan then ordered Donziger to pay a total of about $10 million in fines and fees; referred Donziger for investigation by the U.S. Attorney’s Office—which declined to prosecute him—and then appointed a special prosecutor to prosecute Donziger for criminal contempt, for which he is scheduled to be tried in June 2020. At least one commentator has criticized the referee’s recommendation as being insufficiently deferential to Judge Kaplan’s findings.

NY Judge Disqualifies Sidley's James Cole From Defending Huawei: A New York federal judge has disqualified former Deputy Attorney General James Cole from defending Huawei against federal criminal charges, finding that Cole’s supervision of related matters while in the government was an unwaivable conflict of interest. In a redacted opinion, the judge concluded that the duties Cole owed to his former client—the U.S. government—prevented him from representing Huawei.

Brooklyn Judge Rules DA Cannot Rely on App to Satisfy NY’s New Discovery Law: New York’s new discovery laws are continuing to challenge local prosecutors. A judge found insufficient efforts by the Brooklyn District Attorney’s Office to provide access to witnesses through an app. The app allowed defense attorneys to advise witnesses that they wished to speak with them and left to the witnesses’ discretion whether to respond to the defense attorneys. A trial judge concluded that the app was insufficient and required prosecutors to provide email addresses and cell phone numbers for witnesses to defense counsel. The Brooklyn District Attorney’s Office noted that an online search of a witness’s cell number may well reveal his or her home address, and indicated it was considering appealing the decision.

Judge Axes NY Bribery Case Over DA's Evidence Handling: A New York Supreme Court Judge—the state’s trial court—has dismissed a bribery case against a former engineering executive after finding that the New York County District Attorney’s Office failed to turn over evidence until the eve of trial. The defendant was accused of bribing a mid-level manager at the New York City Department of Environmental Protection to get inside information on water infrastructure contracts. In its decision, the court concluded that while the prosecutors did not appear to have intentionally prejudiced the defense, the scope and timing of the disclosures required dismissal of the indictment.

Ohio Bar Applicant With 'Extreme' School Debt Runs into Potential Character and Fitness Issues: A 2019 law school graduate who, with her husband, has a total of almost $900,000 in student debt—and a history of filing many lawsuits and of not paying her previous debts—faced a skeptical Ohio Supreme Court board of character and fitness. That board issued a recommendation that Cynthia Marie Rodgers be permitted to reapply for bar admission in July 2024.

Judge Allegedly Asked Why 'Aunt Jemima' Was Put on the Jury, Spurring His Reassignment: Pittsburgh, Pennsylvania Judge Mark Tranquilli was reassigned after both a prosecutor and a defense attorney reported that he’d referred to a juror as “Aunt Jemima.” After a defendant was acquitted, the judge asked the prosecutor why he had not used a preemptory strike to disqualify the juror and allegedly said “You know darn well that when she goes home to her baby daddy, he’s probably slinging heroin, too.” The judge is now limited to “administrative duties.” Several defendants who appeared before the judge have now been released or had their convictions reversed, including a priest accused of molesting an 10 year old boy.

Lax Enforcement of Campaign Finance Laws Hurts Voters: An editorial in the Houston Chronicle argues that the Texas Ethics Commission’s transparency requirements are not being followed and criticizes prosecutors for not enforcing the law. The commission requires financial disclosures from campaigns and is empowered to levy fines when the candidates do not comply, but those fines can only be enforced by the attorney general’s office.

Justices Tap Go-To Special Master to Probe Krasner's Office for Alleged Conflicts in Abu-Jamal Case: The family of Daniel Faulkner, a police officer killed in the line of duty, filed a petition arguing that Philadelphia District Attorney Larry Krasner has a conflict of interest because Krasner previously worked in private practice in support of Mumia Abu-Jamal, who was convicted of murdering Faulkner, and Krasner’s deputy handling the appeal directly represented Abu-Jamal in private practice. A special master has been appointed to determine if Krasner’s office should be permitted to represent the state on appeal.

Sandusky Prosecutor Frank Fina Loses His Law License for a Year: Former prosecutor Frank Fina, who led the investigation and prosecution of Jerry Sandusky for child abuse, has been suspended from the practice of law for a year. The Pennsylvania Supreme Court concluded that Fina improperly breached attorney-client privilege by calling then-Penn State General Counsel Cynthia Baldwin to testify before the grand jury about the school’s president, vice president, and athletic director. The Court concluded that the three men were Baldwin’s clients, and reprimanded her as well. Fina’s lawyer said he would appeal the decision.

Criminal Justice Reform Discussions: In the Washington Post, a Virginia prosecutor explains his reasons for choosing to categorically refuse to prosecute simple possession of marijuana; in Indiana, meanwhile, the state legislature considered a bill that would have provided the attorney general with authority to appoint a prosecutor to take cases if a local prosecutor engaged in such categorical non-enforcement (the bill has, for now, failed).

Resources

High Costs: Corruption Scandals in America’s Legal Marijuana Industry: The Global Anticorruption Blog recaps some of the many corruption cases involving marijuana, which has been legalized to some degree by 33 states and the District of Columbia, and recommends reforms to potentially reduce the opportunities for corruption.

FinCEN CTR (Form 112) Reporting of Certain Currency Transactions for Sole Proprietorships and Legal Entities Operating Under a “Doing Business As” (“DBA”) Name: The Financial Crimes Enforcement Network (“FinCEN”) has issued new guidance for Currency Transaction Reporting requirements (“CTRs”) when reporting transactions involving sole proprietorships using DBAs.

Accountability for Senior Leadership Is the Foundation of Ethical Culture: A commentator argues that unless a company’s or organization’s senior leadership buy in to the codes of conduct and the like, the organization will not have an ethical culture.

International

U4 Brief on “An International Anti-Corruption Court? A Synopsis of the Debate”: The Global Anticorruption Blog provides general background information about a proposed International Anti-Corruption Court, which would be modeled after the International Criminal Court and have the mandate to try senior figures for grand corruption when their own justice systems are unwilling or unable to do so.

Do Stronger Campaign Finance Disclosure Rules Reduce Corruption? A Critical Assessment of Transparency International’s CPI Report: A law professor looks at the data Transparency International (TI) cites in its Corruption Perceptions Index to suggest that countries with stronger campaign finance laws are less corrupt. The professor notes that TI’s analysis likely does not acknowledge that many of the countries without campaign finance laws are not democracies, and runs a preliminary analysis of only democracies that suggests that the data do not support a strong link between a lack of robust disclosure laws and corruption.

Jailed Azerbaijani Banker's Wife Loses Battle Over U.K.'s First Unexplained Wealth Order: In the United Kingdom, the National Crime Agency (NCA)has successfully defended on appeal an Unexplained Wealth Order imposed on the wife of an Azerbaijani banker. Zamira Haciyeva, whose husband Cahangir Haciyev was the chairman of the state-controlled International Bank of Azerbaijan and earned less than $100,000 per year, spent $21 million over a decade in London’s Harrods department store. She also purchased nearly $30 million worth of property. If she does not explain the source of the proceeds used for these and other purchases, the NCA will have the right to forfeit them. The case has also drawn attention to expensive properties owned by Azerbaijani president Ilham Aliyev.

The Brazilian Courts’ Indefensible Double Standard: The Disparate Treatment of Harmless Procedural Errors in Corruption and Non-Corruption Cases: A former Brazilian federal prosecutor—and current Harvard Law School student—argues that the courts in Brazil apply a more stringent harmless error standard in high-profile corruption cases than they do in cases involving other kinds of crimes.

SNC-Lavalin Subsidiaries Barred from Public Contracts in Quebec For Five Years: In Canada, a Quebec oversight body has issued an order that prevents four subsidiaries from SNC-Lavalin Group from bidding on public contracts for five years. The company pled guilty in December 2019 to fraud in connection with business dealings in Libya, and, under Quebec’s Anti-Corruption Act, requires a five-year ban from public contracts.

In a First for Israel, a Sitting Prime Minister Goes on Trial: Israel’s recently reelected Prime Minister Benjamin Netanyahu was scheduled to be tried before a three-judge panel in Jerusalem until the coronavirus resulted in the delay of his trial. He faces charges of bribery, fraud, and breach of public trust in three separate schemes, involving allegations that he bribed the media and received hundreds of thousands of shekels in gifts from citizens who sought his assistance in business and personal-legal initiatives.

Malaysia's Anti-Graft Chief Quits After Government Changes: Malaysian anticorruption chief Latheefa Koya has resigned—as has that country’s attorney general, Tommy Thomas—after a change in the country’s leadership.

Justice Reform Puts Mexico at a Dangerous Crossroads: Mexico is considering responding to a year of record violence by again “reforming” its criminal justice system—this time, in a way that a commentator fears will endanger due process, the presumption of innocence, and judicial independence and impartiality.


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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