The National Attorneys General Training & Research Institute
CEPI Newsletter November 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.
'Purest Form of Human Trafficking': Arizona Official Indicted in Adoption Fraud Scheme: The Arizona Attorney General’s Office has charged Maricopa County Assessor Paul Peterson in connection with an alleged adoption scam involving women from the Marshall Islands. Peterson is alleged to have assisted the women in illegally accessing over $800,000 worth of state Medicaid benefits, among other things. The charges were from a multistate state and federal investigation that also included the Utah Attorney General’s Office, which has also charged Peterson with communications fraud, human smuggling, and sale of a child. He also faces federal charges in Arkansas.
Investigation Finds Colorado Catholic Priests Allegedly Abused At Least 166 Children Over Decades: A seven-month investigation in Colorado alleges that 43 priests in that state abused at least 166 children between the 1960s and 1998. The Colorado Attorney General’s Office limited its investigation to children, relied on the voluntary reporting by the church, and issued a 263 page report. One priest, who died in 2006, allegedly abused at least 63 children over two decades. Because the statute of limitations has expired on the allegations detailed in the report, no charges can be brought; however, there is now a settlement fund for victims of clergy abuse.
Louisiana Sheriff’s Deputy, Junior-High Teacher Wife Held on Child Rape and Porn Charges: Reports: The Louisiana Attorney General’s Office filed charges against a now-former lieutenant with the Livingston Parish Sheriff’s Office, Dennis Perkins, and his schoolteacher wife, Cynthia Perkins, for producing child pornography and rape. Dennis was also charged with obstruction of justice for throwing his cellphone into a river to try to hide it from investigators.
Former Newark City Employee Sentenced for Taking Bribe from Man Seeking to Operate After-Hours Social Club: Qaadir Royal, a former Newark, New Jersey, clerk in the city code enforcement office, has been sentenced to three years in prison, including two years of parole ineligibility, for taking a bribe and altering public records. Royal accepted $1,000 from a social club operator for altering a certificate of occupancy to falsely reflect the man was permitted to operate a retail establishment. A second city employee—who solicited a bribe from the same nightclub operator—has also pled guilty. Tajji Williams, a suspended city code enforcement officer, accepted $4,500 for his promise to arrange advance notice of law enforcement activity and priority in the filing and granting of building permits. Both cases were brought by the New Jersey Attorney General’s Office.
AG Hails Conviction of Bronx Leader in Election Funding Scam: A Bronx, New York, nonprofit executive has been convicted of illegally using nonprofit funds for political gain. In the scheme, Anna Mendez assisted City Council candidate Albert Alvarez—who previously pled guilty—with hiding the source of campaign contributions. The case was brought by the New York Attorney General’s Office as part of the Joint Task Force on Public Integrity between that office, the state comptroller, and the city’s Department of Investigation.
Tax Department Worker Pleads Guilty to Embezzling Money: Vermont tax department worker Chelsea Hoadley pled guilty to embezzling money from the state by changing a loved one’s tax return form for three years to increase the employee withholding amount. Hoadley then deposited the resulting additional tax refund—$15,773 over the course of the scheme—into her own bank account. The case was brought by the Vermont Attorney General’s Office.
Judge Obstructed Justice in $10 Million Corruption Case, U.S. Says: Brooklyn, New York, State Supreme Court Chief Judge Sylvia Ash has been charged in federal court with obstruction of justice. The complaint—which is worth reading as a good example of how to exhaustively and clearly outline evidence supporting multiple instances of obstructive conduct—alleges that Ash “signed a false memo that tried to justify millions of dollars in improper payments that [a coconspirator] received from the credit union; concealed and deleted text messages and emails, and wiped clean her iPhone issued by the credit union; and made false and misleading statements to federal investigators.” It also notes that she accepted gifts, including travel expenses, from the board and did not properly complete financial disclosure forms to reflect that fact. Ash, who previously served on the New York State Commission on Judicial Conduct, has been suspended with pay by the state court of appeals.
Katherine and Louis Kealoha Plead Guilty to Felonies to End 3 Separate Cases: In Hawaii, former deputy local prosecutor Katherine Kealoha and former Honolulu police chief Louis Kealoha pled guilty to their roles in several schemes. The sprawling investigation, which has been previously covered by this newsletter, began over four years ago after an alleged mailbox theft, and became—according to the press—one of the largest public corruption probes in state history. The charges to which Katherine Kealoha pled include concealing information about a drug distribution ring that included her younger brother. She had been assigned to prosecute the case, and concealed information about her brother from the detectives with whom she was supposed to be working. As part of the plea, she also agreed to pay restitution for nearly $300,000 she stole from her family in a separate scheme that included efforts by Katherine and Louis Kealoha to frame her uncle for a crime he didn’t commit to discredit him. A jury previously found the couple and two police officers guilty of conspiracy and obstruction of justice in the scheme to steal from her family and frame her uncle.
Horry County Judge Rules State’s Forfeiture Laws Unconstitutional: A county judge in South Carolina has found the state’s civil forfeiture laws unconstitutional under Timbs v. Indiana. The state has a pending bill that would make changes to the laws. In Indiana, the Timbs case itself has been remanded by the Indiana Supreme Court to the trial court to apply the state supreme court’s framework for determining if the forfeiture of the defendant’s Land Rover is excessive.
Quid Pro Quo 101: In a concise primer, a former federal prosecutor outlines quid pro quo requirements after McDonnell v. U.S. and the elements of federal statutes typically used in corruption cases.
Leaders of CFTC, FinCEN, SEC Issue Joint Statement on Activities Involving Digital Assets: The heads of the U.S. Commodity Futures Trading Commission, the Financial Crimes Enforcement Network, and the U.S. Securities and Exchange Commission issued a statement reminding people engaged in activities involving digital assets—like cybercurrency—of their anti-money laundering and countering the financing of terrorism obligations under the Bank Secrecy Act. These obligations may also be of interest to prosecutors investigating cases that include the use of cybercurrency.
Op-Ed: Remaining Silent About Corruption Should Not Be an Option: The Commissioner of the New York City Department of Investigation and a former U.S. Attorney highlight the importance of whistle-blowers in exposing corruption and holding the corrupt accountable. They note that while a duty to report corruption is rare in U.S. law, it exists for people employed by New York City government. There, as a result of a 1978 executive order that has been ratified by every mayor since, public servants are required “to report wrongdoing or jeopardize their jobs and professional advancement if they do not.” This executive order may provide a useful precedent for any other governments seeking to encourage the reporting of corruption.
Atlanta Council OKs the Ethics Task Force’s Recommendations: Recommendations by the Atlanta Task Force for the Promotion of Public Trust include that the city create an independent inspector general’s office with the jurisdiction and power to identify and investigate fraud, waste, corruption, and misconduct.
New Haven Lawyer Apologizes, But Opposing Counsel Wants Sanctions: A lawyer in Connecticut, who was referred to the statewide grievance commission, has apologized to opposing counsel for providing inaccurate interrogatories during a slip-and-fall case. The disclosure issue caused a mistrial and the recusal of the trial judge, who admonished the lawyer on the record and said she was obligated to refer her to the grievance committee.
DC Bar: Ethics Opinion 377: Duties When a Lawyer is Impaired: The DC Bar examined the ethical duties of managers and others when they reasonably believe a lawyer with whom they are employed is suffering from a significant impairment that poses a risk to clients. The opinion considers a “range of ethics rules,” including those addressing lawyers’ duties to clients and the profession, and those addressing the supervisors’ ethical obligations under the rules of professional conduct.
NY AG’s Office Calls for More Funding to Comply with New Criminal Procedure Requirements: The New York Attorney General’s Office has joined district attorneys in New York to request additional funds to comply with amendments to the state’s discovery laws that impose strict burdens on prosecutors to provide fulsome discovery to defense counsel within 15 days of the charging of a case.
NYC Bar Calls for AG Barr to Recuse Himself from Ukraine Dealings: The New York City Bar Association has issued a statement urging Attorney General William Barr to recuse himself from any current or future U.S. Department of Justice review of the current administration’s conduct with the Ukrainian government. The statement argues that if Barr does not recuse himself, “he should resign or, failing that, be subject to sanctions, including possible removal, by Congress.” The statement has drawn a variety of reactions from lawyers and ethics experts.
Allowing Unlicensed Law Grad to Do Legal Work Gets Veteran Lawyer Suspended: In New York, Michael Ira Braverman has been suspended from the practice of law for three months for allowing an unlicensed law school graduate to practice law. In the opinion, the appeals court singled out the employee’s attendance at court conferences and appearance at a deposition, among other things, as prohibited under New York Rules of Professional Conduct 5.5(b) and 8.4(h).
‘Respected’ Poughkeepsie Attorney Wayne Thatcher Suspended for Two Years: New York attorney Wayne Thatcher, a former police officer, has been suspended from the practice of law for two years after pleading guilty to a misdemeanor charge of forcible touching and spending 45 days in jail. In imposing Thatcher’s discipline, the court cited the sentencing remarks of the prosecutor, who praised the bravery of Thatcher’s former client, who agreed to wear a recording device after she reported Thatcher’s misconduct: “Had she not come forward, I have full faith that this defendant would continue to abuse the people that sought help from him, abuse the powerless, abuse those who were in jail depending on him to help them.”
10th Circ. Council Rebukes District Judge for Sex Harassment: The Tenth Circuit’s disciplinary body has publicly admonished a judge in Kansas for making sexually inappropriate remarks to court employees, having an affair with a felon, and habitual tardiness to court engagements. U.S. District Judge Carlos Murguia admitted to his misconduct, which included texting sexual comments to court employees, often late at night; a years-long sexual relationship with a woman who was on probation and using drugs; and lateness to court because of his “regularly scheduled lunchtime basketball games.” In its decision, the disciplinary body concluded that the judge’s actions did not constitute “high Crimes and Misdemeanors” and thus were insufficient to recommend Congress consider impeachment.
Attorneys in Dershowitz Defamation Case Spar Over Production of Taped Audio Recording of David Boies: After successfully disqualifying law firm Boies Schiller from representing a plaintiff who has sued him for slander, Alan Dershowitz is fighting efforts by the plaintiff’s new counsel to analyze an audio recording he used as part of his disqualification effort. The recording—on a microcassette—is, according to the plaintiff’s counsel, only a “partial recording” with portions of dialogue that are “either incomprehensible or wholly inaudible,” raising “grave concerns” about the accuracy of transcripts Dershowitz previously provided the court. The court has not yet issued a decision about the recording.
International Scholars, Stay in Your Lane: The Risks of Uninformed Foreign Commentary on Corruption Cases: The Global Anticorruption Blog is continuing the conversation on Brazilian corruption enforcement by publishing a piece by a former Brazilian prosecutor, now graduate student at Harvard Law School, who argues that non-Brazilian scholars criticizing the case against former Brazilian President Luiz Inácio Lula da Silva are often “reckless” and uninformed. He argues that the risks of such criticism, “which can be manipulated and deployed by partisan advocates, are too great for international scholars to hold forth confidently on topics about which they know too little.” (The commentary below the piece is worth reading, too—particularly Prof. Matthew Stephenson’s five recommendations for those commenting on other countries, including that they take the time to understand the facts and the law before opining.)
DRC Government Members to Post Ethics Code on Office Wall, Resign if They Violate It: In the Democratic Republic of Congo, every member of the newly installed government has signed a pledge agreeing to abide by an ethics code, and to resign if they violate it. The pledge is to be posted in their offices and circulated among their staffs. The pledge includes prohibitions on conflicts of interest, disclosing government secrets, accepting gifts above a certain amount, and the use of public property for personal purposes.
Modernizing Legislative Ethics: Costa Rica’s Turn?: Legislators in Costa Rica are considering whether to reform their ethics code and immunity rules. To do that, they started with a summary and analysis of legislative codes of conduct and immunity rules in certain European and western nations, and then followed up with interviews of reformers to discuss what issues should be considered. Issues included how to address conflicts of interest, who should enforce any rules that are created, how broad legislative immunity should be, and how to govern lobbying.
Honduran President’s Brother Is Found Guilty of Drug Trafficking: Witnesses testified in U.S. federal court about bribes paid to the current and former presidents of Honduras to avoid extradition to the United States. In all, they described millions of dollars in bribes to former president Porfirio Lobo, and current President Juan Orlando Hernández, whose brother was convicted at the trial. They also described bribing other Honduran politicians, including the current minister of security, and testified that President Hernández also accepted money from Mexican drug lord Joaquin “Chapo” Guzman. Hernández is described as “weakened” by the allegations.
Italy (Finally) Protects a Whistleblower, Issues First Penalty for Retaliation: Italy has issued its first penalty for retaliation against a whistleblower since the enactment of a 2017 law that aimed to strengthen protection of whistleblowers in the public sector and extend protections to those in the private sector. Perhaps relatedly, the EU Council recently formally adopted the EU-Wide Whistleblower Protection Directive, which provides that whistleblowers and their supporters will receive special legal protection against retaliation, including dismissal, degradation, or intimidation.
Carlos Ghosn Wants to See Prosecutors’ Files. Nissan Says No.: In Japan, former Nissan boss Carlos Ghosn—now facing criminal charges—is seeking access to evidence prosecutors obtained from Nissan. Prosecutors are refusing to provide the files, saying that they are withholding them because Nissan considers the information too sensitive. Ghosn’s attorneys are arguing that the dispute highlights the cozy relationship between the company and the government, and a legal system that discriminates against defendants.
How a Financial Intelligence Unit is Trailblazing Anticorruption Enforcement: The Financial Intelligence Unit in Mexico, part of the finance ministry, is actively working to fulfill its mandate to combat and prevent money laundering by investigating and freezing bank accounts related to corruption investigations.
Zuma To Stand Trial on Corruption Charges Relating to $2.5bn Arms Deal: Former South African President Jacob Zuma will stand trial on corruption charges related to a $2.5 billion arms deal. Zuma argued that the charges should be dismissed. Relatedly, the U.S. Treasury announced it was sanctioning Atul, Ajay, and Rajesh Gupta—brothers who allegedly conspired with Zuma and his administration—for their role in “a significant corruption network in South Africa that leveraged overpayments on government contracts, bribery and other corrupt acts to fund political contributions and influence government actions.”
What Does the Inspection of SFO ‘Case Efficiency’ Mean for Future Enforcement?: The United Kingdom’s Crown Prosecution Service Inspectorate published a report on case progression in the Serious Fraud Office (“SFO”). That report examined six cases selected at random and made several findings about how cases were being investigated and managed. While the report was generally positive, it provided suggestions about improving the training of SFO staff.
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.