The National Attorneys General Training & Research Institute
Corruption News June 2016
The following is a compendium of news reports over the last month that may be of interest to prosecutors fighting corruption, particularly in the offices of attorneys general. Neither the National Association of Attorneys General nor the National Attorneys General Training & Research Institute expresses a view as to the accuracy of news accounts, nor as to the position expounded by the authors of the hyperlinked articles. The Op-Ed section, in particular, is included to provoke thought about the scope and scale of corruption.
Cases: Investigations, Prosecutions, and Appeals
Alabama House Speaker Mike Hubbard Convicted: After a jury trial, Mike Hubbard, Alabama’s Speaker of the House, was convicted on 12 of 23 felony ethics charges. Attorney General Luther Strange said that the jury’s verdict marked “a good day for the rule of law in our state.”
Norman Seabrook, NYC Jail Guard Union Boss With a Taste for Luxury, Gets Pinched: New York City’s head of the Correction Officers’ Benevolent Association was arrested at his Bronx home, where agents found a Ferragamo bag (retail value: $820) that was allegedly used to provide him with a $60,000 cash kickback. Norman Seabrook is charged with steering $20 million of COBA funds to a hedge fund controlled by Murray Huberfeld, who was convicted of federal fraud charges in 1993 and has faced civil complaints from both the Securities and Exchange Commission and the FDIC. Huberfeld was charged with Seabrook and arrested on the same day.
Portland Mayor Places Police Chief Larry O'Dea on Paid Leave: Portland Police Chief Larry O’Dea has been placed on administrative leave after allegedly lying to an investigator about his involvement in a hunting accident during which his friend was shot in the back. According to the sheriff whose office is investigating that April 21, 2016, shooting, O’Dea reported that his hunting partner shot himself and neglected to inform the investigator of his law enforcement position. When the victim was later interviewed, he reported that O’Dea was the shooter. The Oregon State Police and Oregon Department of Justice are conducting a criminal investigation into the shooting.
Facing Bribery Charges, Opa-Locka Commissioner Rams SUV Into Tree, Killing Himself: A local politician who was a day away from turning himself into Miami-Dade State Attorney prosecutors on corruption charges killed himself by crashing his city-leased SUV into a tree. Opa-Locka Commissioner Terence Pinder, 43, had recast himself as a reformer after pleading “no contest” in 2014 to two prior corruption schemes involving the fabrication of campaign reports and the acceptance of kickbacks from a local power broker. The current charges alleged he had accepted bribes in a scheme where he pushed through legislation to help the briber. The probe of Pinder was separate from an ongoing federal investigation into the Opa-Loka mayor and other high-level officials.
Admiral Pleads Guilty to Lying in Fat Leonard Bribery Scandal: U.S. Navy Rear Admiral Robert Gilbeau pled guilty in federal court to charges in connection with a massive bribery-for-secrets case involving a Singapore-based defense contractor named Leonard Glenn Francis, a/k/a “Fat Leonard.” Gilbeau is the tenth—out of fourteen charged—defendant to plead guilty. Of the five who have been sentenced, terms have ranged from 27 to 78 months in prison, and have included a restitution order of nearly $35 million.
Former CEO of CalPERS is Sentenced to Prison for His 'Spectacular Breach of Trust': A federal judge sentenced Federico Buenrostro, Jr., to 54 months’ incarceration for accepting more than $200,000 in bribes while he was the head of the California Public Employees’ Retirement Systems (CalPERS). Buenrostro also admitted that he tried to steer CalPERS investments to an associate, who collected a $14 million commission as a result of pension fund investments that Buenrostro steered his way.
Former SSA Judge Pleads Guilty in Fraud and Corruption Case: Former chief regional Social Security Administrative Law Judge Charlie Paul Andrus, of Huntington, West Virginia, has pled guilty in federal court to conspiring to discredit a witness he believed was providing information about one of his colleagues on the bench. Andrus and the other judge, David Black Daugherty, had the witness—a court employee—followed in an effort to “catch” her violating a program that allowed her to work from home, with the hope of discrediting her potential testimony and establishing grounds to terminate her. Federal charges that remain pending against Daugherty and a lawyer allege a lengthy scheme that resulted in more than $600 million in fraudulent disability payments to claimants. Daugherty and the lawyer were the subjects of a 2011 exposé in the Wall Street Journal.
Prosecutors: U.S. Rep. Chaka Fattah Led “White-Collar Crime Spree”: U.S. Representative Chaka Fattah’s federal racketeering trial is in the jury’s hands. Fattah is alleged to have taken an illegal $1 million campaign loan from a friend to fund his unsuccessful 2007 run for mayor and to have used federal grant money to repay much of the loan. Other allegations aired during the month-long trial include that Fattah improperly obtained money to pay for his nanny and papered-over an improper transfer of nearly $20,000 that he used to make a down payment on a home in the Poconos.
Anticorruption Legislation: Discussed, Pending, and Passed
Anemic New York Legislature May Be More Active at End of Session: Bills that propose stripping convicted lawmakers of their pensions have failed to pass both houses in the New York State legislature, but may yet result in laws that would ensure that corrupt legislators would not have taxpayer-subsidized retirements. Other ethics reforms, including those requiring more disclosure on affiliations with outside groups, appear less likely to succeed.
Grass-Roots Anticorruption Drive Puts Heat on Mexican Lawmakers: A package of anticorruption measures is being considered by Mexico’s legislature. Those laws, called “3 de 3,” or “3 out of 3,” would require government officials to disclose their assets and potential conflicts of interest, and prove that they are paying taxes. The legislation even encompasses officials’ close relatives, and is said to be “among the farthest-reaching public disclosure measures in the world.” While the law remains pending in the legislature, more than 560 public servants have signed on to the disclosure initiative and revealed their own assets and potential conflicts of interest.
Korea’s Corruption Fight Faces Backlash for Being Too Strict: Korea is preparing to implement strict laws against corruption and bribery, which include provisions subjecting government employees, teachers, and journalists to fines if they are treated to meals worth over $25 (30,000 won). Critics of the new measures raise concerns the law will affect a benign social tradition of exchanging gifts with business associates during the holidays, and argue that the law will hurt farmers who produce fruits and meats that traditionally comprise gifts given in business settings.
O'Dea, Hales Fail the Public: Editorial Agenda 2016: The Oregonian Editorial Board criticizes both the Portland Police Chief and the Mayor for what it characterized as their “intentional and cowardly response” to Chief O’Dea’s shooting of a hunting companion. The editorial calls for O’Dea to leave law enforcement if he lied to other authorities about his role in the shooting.
Kermit Washington Indictment and The Allure of Zero Overhead Charity: Former NBA player Kermit Washington is facing federal fraud charges related to his charity, Project Contact Africa. Washington told potential donors that 100 percent of their donations would go to Africa, but is alleged to have diverted money given to PCA to pay for personal expenses, including vacations, rent, and jewelry. Peter J. Reilly, of Forbes, argues that Washington may have avoided these charges had he hired an administrator to ensure his charity was managed in accordance with applicable laws or joined an established charity with the proper infrastructure.
A High Water Mark on Public Corruption: Through the lens of the conviction of former Alabama Speaker of the House Mike Hubbard on 12 felony charges, editorial summarizes convictions of Alabama politicians—beginning with the 2007 federal conviction of former Governor Donald Siegelman and including the convictions of four other politicians from both major political parties. The editorial argues that “Voters should remember how Hubbard’s colleagues flocked to his side after his indictment, helping him win re-election to the House, then sending him back to the seat of power as House Speaker in a near unanimous vote. We must work on our memories, which seem to fail us on Election Day.”
Settling for Development with Integrity: Integrity Vice President of the World Bank Leonard McCarthy argues that the World Bank’s settlements with companies engaged in corrupt behavior reflect the increased enforcement of laws against corruption; the ability to provide restitution to the victims of fraud and corruption; and the change of business norms through requirements embedded in the settlements themselves.
Bribery and Corruption in 2016: Transparency International and others conclude that global corruption is endemic, but is being met with increased enforcement actions against companies for, among other things, bribing foreign officials. Notably, “good government groups” themselves have been impacted by the increased scrutiny of corrupt behavior: the president of Transparency International’s branch in Chile was forced to resign when the “Panama Papers” revealed that he was linked to at least five offshore firms.
Hate Rush Hour Traffic? Blame Corruption: Traffic fatalities are the leading cause of death in developing countries. A new report theorizes that the combination of a lack of resources and government corruption results in poorly maintained roads, weak enforcement of the laws, and reduced access to medical assistance. For example, there are reports in China of drivers who intentionally kill pedestrians after an accident because they are confident they will bribe their way out of murder charges and pay less compensation to a deceased victim’s family than to a disabled living victim.
A Corruption Crusade in Guatemala: The New York Times frames arrests of high-ranking politicians in Guatemala as a symptom of “institutionalized corruption in a region where it is widespread.” The fight against that corruption began a decade ago, with the United Nations’ International Commission Against Impunity in Guatemala, an international team of experts that provides technical expertise and political cover to Guatemalan authorities investigating and prosecuting corruption cases. The most recent charges include the arrests of three former cabinet ministers on allegations they used over $4 million (U.S.) of public money to buy houses, boats, and a helicopter for former Guatemalan president Otto Perez Molina. Perez Molina is himself incarcerated on charges of money laundering and conspiracy.
Media: Investigative Journalism About Corruption
The Panama Papers: Why They Matter: A man calling himself “John Doe” is responsible for providing over 11 million documents—now known as the “Panama Papers”— to a German newspaper in 2015. The International Consortium of Investigative Journalists then took the lead in disseminating and publishing the data, which has led to the resignation of the Prime Minister of Iceland and backlash against the British Prime Minister, who financially benefitted from offshore accounts created by his father. “Doe” has offered to cooperate with law enforcement and prosecutors now investigating some of the world’s most powerful people for potential tax evasion and other charges.
Cleaning Up: An Economist author argues that while coverage of corruption scandals may leave the impression that a state or country is becoming more corrupt, the reality may be quite different: the fact that the corruption is being acknowledged and often punished may instead mean that the government is instead on its way to becoming less corrupt.
Journalists Without Borders: CONNECTAS Helps Reporters Look Beyond Their Own Country Lines: A Bogota-based nonprofit called CONNECTAS has facilitated collaboration among journalists from Latin American countries, resulting in stories with a transnational focus. CONNECTAS also provides training, fellowships, and access to an online “Hub” that operates as a clearinghouse for reportorial, editorial, and financial assistance.
Other Corruption News
The NAGTRI International Fellows Program took place from June 4-11, 2016. Since 2011, this program has provided a forum for elite government attorneys from around the world to learn from expert faculty members and from each other; explore common issues; and establish an international network to the mutual benefit of their offices. This year's topic was The Prosecutor’s Role in Fighting Corruption and Promoting Public Integrity. Twenty-five fellows from 17 countries, six U.S. states, and one U.S. territory produced four papers addressing various corruption-related issues. Those papers will be available on NAGTRI’s website this summer.
Amie Ely is the Editor of Corruption Newsletter and may be reached at 202-326-6041. The Corruption 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 email@example.com.