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

CEPI Newsletter September 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.

CEPI Updates

Presentations to Brazilian Prosecutors and the Vietnamese Central Committee

CEPI’s Director spoke to prosecutors in Pernambuco, Brazil about the use of plea and cooperation agreements in the United States. Many thanks to the Ministério Público de Pernambuco for the opportunity to discuss this important topic. Thank you also to the George Mason University Schar School of Policy and Government’s Center for Business Civic Engagement for the opportunity to speak to the Vietnamese Central Committee about combatting public corruption.

Corruption Cases

State

Judge: Thomas Attorneys Cannot Represent Mount Vernon's Top Lawyer in Corruption Case: Two criminal defense attorneys from Florida, Michael Pizzi and Benedict Kuehne, are not being permitted to represent Mount Vernon, New York, Corporation Counsel Lawrence Porcari. Westchester County Judge David Zuckerman agreed with prosecutors from the New York Attorney General’s Office that the two lawyers were potential witnesses in the case because they received over half of the $365,000 in city water funds that Porcari allegedly diverted to pay Mayor Richard Thomas’s personal legal bills and public relations expenses. The Florida lawyers also represented Thomas in a related corruption case, which resulted in the judge concluding that their ongoing duties to him also preclude them from representing Porcari. Other city water funds went to other law firms representing Thomas in that corruption case, including one whose partner, Randall Jackson, withdrew from the case after he was notified that the payments to his firm were under investigation.

NM Supreme Court Asked to Review Constitutionality of State’s Anti-Corruption Law: The New Mexico Attorney General’s Office has asked the New Mexico Supreme Court to review the dismissal of several cases alleging officials violated the state Government Conduct Act, which forbids public employees from using their position or office for their own benefit. The state’s intermediate appellate court dismissed four cases involving allegations against country treasurers, judges, prosecutors, and a tax and revenue department secretary, concluding that the Government Conduct Act was too vague or not intended to operate as a criminal statute.

Federal

FBI Seeks Tips on Marijuana Industry Corruption: In a podcast, the Federal Bureau of Investigation announced that it is actively seeking tips on public corruption related to the marijuana industry, noting that because states require licenses to sell the drug, bribes maybe be paid to secure those licenses. The FBI spokesperson stated that corruption was “more prevalent” in states where licensing was decentralized, as there, “the level of corruption can span from the highest to the lowest level of public officials.”

Former State Police Union Chief and Lobbyist Charged with Conspiracy and Obstruction: Federal authorities charged Dana Pullman, the former union chief of Massachusetts’ State Police Association (SPAM), and Anne Lynch, a union lobbyist, with conspiring to defraud SPAM through the payment of bribes and kickbacks from Lynch to Pullman, and with perjury and obstruction of justice.

Fallout of Guilty Plea for Elected Officials Not Always Clear: After Cohoes, New York, Mayor Shawn Morse pled guilty in federal court to wire fraud, his city’s council met to determine if he should, under state law, be automatically removed from office. There is apparently widespread disagreement about whether, under New York law, a guilty plea in federal court is considered a “conviction” for the purposes of requiring local or state elected officials to leave their office. Some have concluded that the official must be sentenced—which, in the federal system, typically occurs at least three months after the defendant has been determined to be guilty to facilitate the preparation of a presentence investigation report—for the adjudication to the final. A legislative correction is under consideration.

2nd Circuit's Decision Could Be 'Tip of the Iceberg' for FCPA Challenges: In U.S. v. Ng Lap Seng, the Second Circuit Court of Appeals ruled that McDonnell’s “official act” requirement did not apply to the Foreign Corrupt Practices Act or to 18 U.S.C. § 666—a federal bribery statute not at issue in McDonnell. Some defense attorneys concluded that this decision may “embolden federal anticorruption prosecutors.” It may also be of use to state corruption enforcers as useful precedent for arguing McDonnell does not apply to state statutes.

SEC Accuses Florida Attorney of Defrauding NFL Players: After an article—profiled in last month’s CEPI Newsletter—alleging former NFL players had been defrauded by their attorney, the U.S. Securities and Exchange Commission has sued Tallahassee, Florida lawyer Tim Howard and his hedge fund, Cambridge Capital Group Advisors LLC. The SEC alleges that Howard and his fund used the players’ money—which they had promised to invest—to pay themselves fabricated “broker fees.”

Ethics

Hawaii is considering amending Rule 8.4(c) of its Rules of Professional Conduct to add a new accompanying Comment, which would clarify that attorneys supervising or participating in lawful, covert, government investigations, are not in violation of the prohibition against deceitful or dishonest conduct, if certain requirements are met. It would follow similar amendments by states including Colorado and Oregon to explicitly permit the oversight of undercover investigations by prosecutors.

Confession Properly Voided Following Detectives' 'Good Guy Approach': In New Jersey, the state’s supreme court concluded that a defendant’s confession to rape was not voluntary when it was the product of psychological pressure brought by detectives using a “good cop” approach. In State v L.H., (A-59-17), two detectives encouraged the defendant to confess by promising him that he would not face prison—but would instead get needed treatment—if he did so; contradicted their previous Miranda warnings; and minimized the defendant’s actions. Notably, New Jersey requires that prosecutors prove beyond a reasonable doubt that a defendant’s waiver of his rights was knowing, intelligent, and voluntary; federal law (and presumably the law of at least some states) imposes the lesser burden of preponderance of the evidence. The court also concluded officers’ failure to record an identification procedure during which a victim identified the defendant as her rapist—as required under New Jersey case law—meant that the case would be remanded for a hearing to inquire into the reliability of the identification, even though the procedure complied with the attorney general’s office guidelines as they existed at the time.

Tennessee Supreme Court Vacates Board of Professional Responsibility Formal Ethics Opinion 2017-F-163: The Tennessee Supreme Court vacated the Tennessee Board of Professional Responsibility’s Formal Ethics Opinion 2017-F-163, an opinion that concluded that prosecutors’ ethical duties to disclose evidence were broader than what was required by the constitution, and that the requirement that such disclosures be “timely” meant that they had to be made “as soon as reasonably practicable.” In a unanimous decision, the state supreme court reversed the board’s opinion, concluding that a prosecutor’s ethical duties should be coextensive with the prosecutor’s legal and constitutional obligations. After surveying decisions construing Rules 3.8(d) across the states, the court concluded that the Tennessee rule was coextensive in scope with federal and state constitutional law. (Note, however, that ABA Formal Opinion 09-454 and several states have concluded that the ethical rules are broader than what is required by Brady and its progeny.)

Potpourri

What Happens to Those Who Investigate Government Corruption: In an interview, the former Executive Director of the Pennsylvania Crime Commission discusses his work investigating public corruption and organized crime.

Are ‘News Deserts’ the Latest Risk Factor for Corruption?: A report published by the University of North Carolina’s journalism school analyzes the decline of the American newspaper industry, resulting in what its author terms “news deserts.” A writer at the FCPA Blog warns that the lack of media coverage of the government—particularly at the local level—may result in more corruption.

The American Bar Association is Fighting Washington’s Efforts to Tackle Money Laundering: The American Bar Association (ABA) is continuing to lobby against Congress’s efforts to require owners of U.S. companies to disclose their identities. The bills under consideration are intended to “make it much harder for criminals to hide their money in shell companies with anodyne names.” The ABA argues the requirements would impose “burdensome federal beneficial ownership reporting requirements they impose on small businesses and their lawyers.” One of the bill’s backers—a former attorney general—says that he is “embarrassed to say that there are lawyers who have dedicated their professional lives to facilitating clients to navigate this darkened world.” The FCPA Blog has also been covering this issue.

International

New FinCEN Division Focuses on Identifying Primary Foreign Money Laundering Threats: The Financial Crimes Enforcement Network (FinCEN) announced the launch of its Global Investigations Division (GID), which will implement targeted investigation strategies using FinCEN’s powers to combat illegal finance threats and related crimes. The GID will have powers to investigate both domestic and international terrorist financing and money laundering threats.

Canadian Corruption and the SNC-Lavalin Affair: What Comes Next?: Our friends at the Columbia Law School Center for the Advancement of Public Integrity (CAPI) analyze the fall-out from the SNC-Lavalin case for Canadian Prime Minister Justin Trudeau, who the Conflict of Interest and Ethics Commissioner found in a 63-page report improperly pressured former Attorney General Jody Wilson-Raybould to grant a deferred prosecution agreement (DPA). SNC-Lavalin, a large Canadian construction firm, had been charged with making numerous bribes to officials in Libya to secure contracts. Trudeau pressured Wilson-Raybould to grant SNC-Lavalin—which financially supported his party and lobbied him to both introduce DPAs and grant them one—a DPA rather than have it face a potential ban on bidding on Canadian government contracts.

Colombia’s Fragile Peace Is in Peril: An opinion piece in The New York Times details the recent release of a video by a former top commander of the Revolutionary Armed Forces of Colombia—often know by its Spanish acronym as “the FARC”—that calls for an end of a 2016 peace accord. The former commander, Luciano Marín, was the lead negotiator during peace talks that resulted in the accord. He spoke of what he characterized as a “corrupt oligarchy” controlling Colombia as grounds for ending the peace accord.

The Akasha World of Killings, Bribery and Drug Dealing: Baktash Akasha Abdalla, the leader of a violent organized crime family in Kenya, has been sentenced to 25 years in prison for narcotics, weapons, and obstruction offenses. During his sentencing hearing, a cooperating witness detailed how Akasha and his brother Ibrahim paid about $4 million in bribes to Kenyan police, politicians, and prosecutors in an effort to avoid being extradited to the United States.

Mexican Government Grants Itself Right to Seize and Sell ‘Unexplained’ Corporate Assets: Mexico recently passed the National Law for Dominion Extinction, which permits its federal government to take ownership of any property derived or presumptively derived (more on this later) from illegal activities. The owner of the assets at issue has the burden of proof to show that they were not derived from illegal funds, and prosecutors have the power to sell assets before there is a final judicial decision. These assets can be seized from individuals or corporations, and the proceedings to determine whether putative owners can keep them are civil in nature.


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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