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

CEPI Newsletter October 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

AG Wants to Wrap Up Criminal LLCs: The Delaware Attorney General’s Office has filed actions in the state’s Court of Chancery to dissolve 15 businesses for involvement in criminal activities. Those businesses include several LLCs associated with Paul Manafort or Michael Cohen; two LLCs that were used to assist the Revolutionary Armed Forces of Colombia, or FARC; and several companies associated with entities on the Office of Forensic Assets Control, or OFAC, sanctions list.

Missouri Attorney General Refers 12 Catholic Clergy for Prosecution: A year-long investigation by the Missouri Attorney General’s Office into sexual abuse by clergy revealed that 163 clergy were accused of sexual abuse or misconduct against minors. Twelve have been referred to local prosecutors for investigation, as the Missouri Attorney General’s Office does not have the authority to prosecute the potential cases. The article notes that attorneys general in at least 17 other states and the District of Columbia opened investigations into sexual abuse by clergy in the wake of a report by the Pennsylvania Attorney General’s Office about widespread abuse in that state.

Ex-Southern State Corrections Officer Sentenced for Drug Smuggling: A former senior correctional police officer in New Jersey was sentenced to seven years in state prison for smuggling oxycodone, marijuana, and tobacco to inmates. Steven B. Saunders, who was suspended from his position when he was arrested in November 2017, will be ineligible for parole for five years. The case against him and his co-conspirators was brought by the New Jersey Attorney General’s Office.

Sheriff Spoke of Killing Deputy Who Had Recording of His "Racially Offensive" Comments, Charges Say: Now-former Granville County (North Carolina) Sheriff Brindell Wilkins has been charged with obstruction of justice for discussing a plan to murder a former deputy sheriff who had a recording of him using “racially offensive” language. Wilkins allegedly told a potential hitman to kill the former deputy, advising him to dispose of any murder weapon and to “tell nobody nothin’,” as cases are often solved because criminals brag about their crimes. The sheriff was later suspended. The recordings of Wilkins making allegedly racist comments and of him discussing the murder of the deputy were made in 2014; it is not clear why five years elapsed between these incidents and the charges.

Pennsylvania State Senator Resigns Amid Child Pornography Investigation, Lawmakers Say: Now-former Pennsylvania state Senator Michael Folmer has been charged with possessing child pornography and has resigned from office following an investigation by the Pennsylvania Attorney General’s Office.

Federal

Judge Denies NCAA Request for Gatto Material: A federal judge has denied requests by the NCAA and Yahoo Sports to access non-public evidence from an investigation into a scheme to pay college basketball recruits. The judge determined that the rights of uncharged third parties outweighed the rights of the media and the NCAA, given the “reputational and professional repercussions” that the third parties might face if allegations against them became public. The NCAA officials and media will still have access to wiretapped calls and other materials entered into evidence during the criminal trials, which is public. The decision may be of interest to prosecutors who are faced with requests by the press or other interested non-parties for grand jury or other protected evidence implicating uncharged individuals.

Former Detroit Employee Sentenced in Connection with City's Demolition Program: Aradondo Haskins, a former field operations manager for the City of Detroit (Michigan) Building Authority who oversaw Detroit’s demolition program was sentenced to a year in federal prison for conspiring to commit honest services fraud and bribery. Haskins accepted bribes in connection with a bid-rigging scheme.

Court Rules Texas DA Must Face Political Retaliation Claims by 3 Ex-Employees: Former employees of the Hidalgo County (Texas) Criminal District Attorney’s Office sued District Attorney Ricardo Rodriguez Jr. for firing them because they supported the incumbent he defeated. The Fifth Circuit Court of Appeals concluded that Rodriguez had qualified immunity as to claims by four employees who worked as certain types of investigators, but not as to three employees who had more clerical/ administrative roles.

Ethics

Enforcement of Ethics Rules by State Ethics Agencies: Unpacking the S.W.A.M.P. Index: The Coalition for Integrity has released a report on state ethics agencies, which analyzes how the agencies implement their enforcement and sanction powers.

Criminal Contempt Investigation of Attorney Prompts Subpoena Fight Before Circuit: Lawyer Frederick Oberlander, who was suspended from the practice of law for a year in New York state over using sealed materials associated with a cooperating witness against whom he was litigating, is facing contempt charges for defying a grand jury subpoena. The decision outlining the reasons for his suspension details Oberlander’s accusations about judges and others, including references to star chambers and “illegal super-sealed docket system[s] of private justice,” and follows a similar one-year suspension by a federal court based on the same conduct.

Lawyer Begs to Be Disbarred In Obnoxious Letter to Bar Discipline Authorities, Gets What He Wants: A lawyer in Washington, D.C. named Glenn Stephens has been disbarred after he—as the professional responsibility board put it—“unequivocally, and colorfully, sought to be disbarred.” The case is, among other things, a cautionary tale about how a disgruntled former temporary worker attempted to use everything from online reviews to intervening in cases to retaliate against his former employer. The opinion is worth reading, if for no other reason than to see an unexpected reference to 1990s hip-hop artist Flavor Flav.

Tucker Arensberg Ripped For Lawyer's Lost, Locked Texts: A law firm partner who “allegedly threw out his old firm-owned cellphone and all the text messages on it, and ‘forgot’ the password for his new phone just as it was being sought in discovery” is the subject of a motion by plaintiff’s counsel seeking a compulsion order from a federal court in Pennsylvania. In their memorandum, the plaintiffs argue that the firm itself had a duty to protect the data on the phone it provided for its attorney’s use.

Jones Day Botches Grand Jury Redaction in Attack on DOJ: A major white-shoe law firm has inadvertently disclosed grand jury materials in a court filing in Virginia that accused the U.S. Department of Justice of serious misconduct in a criminal opioid case. The filing employed inadequately blacked-out sections that summarized grand jury testimony; readers were able to cut-and-paste from the memo to read the “redacted” sections. The firm has since apologized to the court for its error after a federal magistrate judge raised the possibility of sanctions.

Resources

The New York Prosecutors Training Institute (NYPTI) issues a quarterly Ethics Bulletin, which is accessible to all readers, on decisions involving ethical issues from around the state. NYPTI’s partners in this project are the District Attorneys Association of the State of New York (DAASNY’s) Ethics and Ethics Guidance Committees. Prosecutors should also be sure to request access to the Prosecutors Encyclopedia, a terrific compendium of expert transcripts and other resources, by visiting www.nypti.org and clicking the green button marked “Sign in to NYPTI Services.”

The Harvard Business Review Spotlight on White Collar Crime: The Harvard Business Review published a series of articles about white collar crime and how to reduce it, including a piece titled “We Were Coming Up Against Everything from Organized Crime to Angry Employees” about the waste management industry in Norway, which includes the strategy of one CEO to clean up his own company and recruit his competitors to join his drive for reforms. (He notes that the competitors first told him that his public stance on corruption in their industry was “annoying,” but then joined in seeking some of the reforms he’d proposed.) Another piece is written by Mary Jo White, the former U.S. Attorney for the Southern District of New York and SEC Commissioner, who advises that to “build an ethical culture, you have no choice but to follow through on your no-tolerance promise.” Through both case studies and broader research, the articles conclude that clean business is also good business: profit margins for non-corrupt companies are actually higher than those with weaker ethics.

The Contagion of Corruption: Scientific American explores whether corruption is contagious.

International

GOP Lawmaker: 'Dangerous' Abuse of INTERPOL by Russia, China, Venezuela: At a hearing hosted by the U.S. Helsinki Commission, several members of the U.S. Congress expressed concern that Russia, China, Venezuela, and other “undemocratic regimes” were abusing their access to INTERPOL to file Red Notices to attempt to arrest political dissidents abroad. Both the House and the Senate are considering bills that would crack down on abuse of INTERPOL by, among other things, restricting how notices can be used by authorities in the U.S. In their press release, these members of congress also express concern about the abuse of INTERPOL notices by other countries, including Azerbaijan, Kazakhstan, Tajikistan, and Turkey.

SEC Chairman Scolds Weak Anticorruption Enforcement Abroad: In a recent speech, SEC Chairman Jay Clayton criticized weak anticorruption enforcement by other governments as, among other things, leading to unfair business advantages for corrupt companies from those countries.

Global Money-Laundering Watchdog Closely Monitoring Facebook's Libra, Official Says: Global anti-money laundering watchdog the Financial Action Task Force (FATF) is looking closely at the cryptocurrency Libra, which Facebook has proposed launching next year. FATF’s concerns include the ease with which Libra might be used to launder money or finance terrorism.

A Group of International Jurists and Scholars Condemns the Conviction of Former Brazilian President Lula as Unfair and Politically Motivated. A Group of Brazilian Prosecutors Defend Their Conduct, and the Conviction. Read Their Dueling Open Letters Here!: An interesting conversation about the conviction of Brazil’s former president through Operation Car Wash/ Lava Jato is happening on the Global Anticorruption Blog. The blog has posted letters from judges scholars, from prosecutors, and from the defendant’s own attorneys.

Costa Rica Imposes Corporate Criminal Liability, Compliance Program Requirements: Costa Rica has now imposed corporate criminal liability for all corruption offenses and set out basic elements for corporate compliance programs to obtain reduction of any corruption-related fines. The new law also adds accounting fraud as a new offense.

Italy Anti-Corruption Organization to Demand Cooperation from Dominican Republic AG: The head of an Italian organization that fights corruption has demanded that the attorney general of the Dominican Republic meet with him to discuss an investigation. Prosecutors in Italy have been investigating an Italian engineering company over allegations that it paid bribes in connection with the construction of a thermoelectric plant in the Dominican Republic, and their efforts to communicate with their Dominican counterparts have been futile.

The Legacy of Guatemala’s Commission Against Impunity: Guatemala’s impunity commission—known as CICIG after its Spanish initials—has been disbanded after outgoing Guatemalan President Jimmy Morales, who CICIG was investigating for campaign finance violations, refused to renew its mandate. An article discussing similar commissions created by Honduras, El Salvador, and Ukraine outlines the structure of these commissions, which include bringing in experts with no ties to the country (thereby reducing the chances they might be required to investigate people they know and or be threatened).

Former Honduran National Police Officer Charged with Conspiring to Import Cocaine into the United States and Related Firearms Offenses: Former Honduran National Police Officer Mauricio Hernandez Pineda has been charged with conspiring to import cocaine into the United States and weapons offenses. Hernandez Pineda is alleged to have worked with drug dealers and other Honduran politicians and law enforcement officers to facilitate the shipments of tons of cocaine into the U.S., including by providing armed security and giving sensitive law enforcement information about planned operations to the drug dealers.

Swiss Attorney General Gets 4 More Years Amid FIFA Fallout: Switzerland Attorney General Michael Lauber has been re-elected by the Swiss parliament to a third term. A parliamentary panel recommended that the legislature not reappoint him, claiming he damaged the reputation of his office by engaging in confidential meetings with the president of FIFA while his office was investigating allegations that the world soccer’s government body was corrupt. Lauber faces disciplinary action and has been ordered by the Swiss criminal court to recuse himself from the investigation. An earlier article suggests that he may have engaged in similar meetings in other major cases, potentially imperiling them.


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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