To give you an idea of how professional AUSA Tanya Treadway is, take a look at the first paragraph of the original speaking indictment in U.S. v. Schneider, a health care fraud and controlled substances case being brought in the District of Kansas: “Defendant Stephen J. Schneider is a doctor of osteopathic medicine, licensed in Kansas, and board certified in family medicine. Prior to becoming a doctor, he was a butcher.” No, I’m not making this up. The Superseding Indictment, a kitchen-sink affair, is also full of gratuitous, prejudicial verbiage, including community nicknames for Dr. Schneider. U.S. District Judge Monti Belot, not particularly known as a champion of defendants’ rights, has apparently had enough of Treadway’s tactics. He restricted the Government’s use of certain words and phrases contained in the Superseding Indictment and threw out a good deal of the Government’s proposed evidence, in pre-trial rulings on Monday. Yesterday, Treadway and her boss filed a notice of interlocutory appeal on the evidentiary ruling. Belot’s granting of the defense motion in limine is almost certainly not appealable, but the Government’s actions will cause the re-cheduling of the trial, which is currently set for Monday, Febraury 2. When Treadway fist told Judge Belot that she would appeal his evidentiary ruling he angrily accused her of threatening the Court. The defense. rightfully, is howling about the interlocutory appeal and resulting delay. Defendant Linda Schneider has been detained for 13 months and Stephen Schneider is under house arrest. Read all about the latest developments here, here, and here.
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According to the Reuters story, carried here in the Washington Post, the agreement to pay $559 million in fines is related to long-running bribery of Nigerian officials by KBR Inc. executives in connection with a Nigerian gas liquefication project. KBR Inc. was a Halliburton subsidiary during the relevant time period. The WSJ reports here that it is currently unknown whether Halliburton will have to admit to bribery and FCPA (Foreign Corrupt Practices Act) violations as part of what looks like a global settlement. The deal still awaits final DOJ approval.
Today’s WSJ has an interesting story here about the “backwards” progress of the Madoff probe, contrary to the typical “from the bottom up” investigatory model. Of course this was necessitated by the SEC’s failure to investigate Madoff’s investment operation, depite years of credible warnings, topped off by Madoff’s surprise confession. The article focuses almost entirely on the SEC’s current probe, hardly mentioning DOJ’s concomitant investigation, which must result in an indictment before long.
The Houston Chronicle reports here that former Enron CEO Jeff Skilling has asked the full Fifth Circuit to review the panel decision, authored by Ed Prado, affirming his convictions. The main thrust of the motion apparently pertains to the honest services fraud question, with Skilling claiming that the panel strayed from recent Fifth circuit precedent.
The SDNY opposes. Dreier appears to be seeking a Madoff-type 24-hour surveillance release. Law.com carries the New York Law Journal article by Noeleen Walder here.
The BLT reports here that Senator Arlen “Single Bullet” Specter and his Republican colleagues on the Senate Judiciary Committee have obtained an automatic one-week delay on the confirmation vote for Attorney General nominee Eric Holder. They want to ask more questions. Apparently they didn’t hear the part of the Inaugural Address about putting away childish things.
Today’s Wall Street Journal reports that Frank DiPascali, who allegedly executed “trades” for Bernard Madoff, has become a focus of the federal investigation. Such focusing make sense, since most of the Madoff trades apparently never occurred. The WSJ story is here.
The Washington Post reports here on President Bush’s commutation, to time served, of the sentences handed out to former Border Patrol Agents Jose Compean and Ignacio Ramos. The two were convicted of shooting an unarmed illegal immigrant in the buttocks as he fled. They later attempted to cover-up their actions. They had each served 26 months on sentences of 12 years for Compean and 11 for Ramos. DOJ had not completed its own analysis of whether a pardon or commutation was appropriate in the case. Bush apparently considered the guilty verdicts just, but the sentences too harsh. That could be said of thousands of people currently serving federal prison terms. But Compean and Ramos had the backing of many prominent conservatives as well as the anti-immigration lobby. The Post article also notes the extremely low number of traditional, low-profile pardon and clemency applications, applications which go through a rigorous and time-consuming process, that were acted upon by Bush.
Many of our citizens want to see federal investigations and prosecutions of criminal violations which were allegedly carried out during the Bush-Cheney years. You know the litany–warrantless wiretapping and data mining; torture and rendition; perjury before Congress and obstruction of justice.
But Barack Obama has said that he wants to look forward; he doesn’t want to “criminalize policy differences.” This is an interesting choice of words–first enunciated by Oliver North during the Iran-Contra Scandal, if I’m not mistaken. By using that phrase, Obama clearly wishes to send a signal of reconciliation and non-retaliation to official Washington.
So, pretend you are Eric Holder. You have been confirmed as Attorney General of the United States. Assume that you were outraged by the waterboarding and warrantless wiretappings and believe that they violated U.S. criminal law. During your first two months as Attorney General you quietly authorize, or allow to go forward, multiple criminal investigations of these activities. Then one day you get a call from President Obama, summoning you to the Oval Office. His message is clear: “Eric, I want these investigations to end. It’s time to move forward.” “But Mr. President,” you protest, “these are almost certainly violations of U.S. criminal law. It is DOJ’s job to enforce the criminal law. If we shut these investigations down we are telling Americans that Presidents and Vice-Presidents are above the law.” President Obama’s response is curt: “Shut them down. That’s an order. I’ve made my position clear.”
Is this political interference with the DOJ? Clearly. Is it improper as a matter of law or policy? Clearly not. The Department of Justice is part of the Executive Branch. As of tomorrow, President Obama will be the Chief Executive Officer of the Executive Branch. The decision whether to open or close any criminal investigation is at bottom a policy decision and the President gets to make that decision is he so desires.
But take another example. Say that a U.S. Attorney’s Office obtains credible evidence that a sitting Democratic Governor, close to President Obama, has committed a crime. An investigation of Governor X begins and the evidence gets stronger. One day Attorney General Holder is summoned to the White House by President Obama, who says: “Eric, I want you to shut down the investigation of Governor X. That’s an order.” “But why?” you protest. “Never mind why,” Obama responds. “I give the orders here. Find someone else to prosecute. There are plenty of criminals around.”
Is this political interference with the DOJ? Clearly. Is it improper as a matter of law or policy? There is nothing illegal about this order. Again, as Chief Executive, Obama has the authority to shut down any criminal investigation. But it is clearly improper, absent some compelling justification.
Why do I say this? What is my criterion for distinguishing proper from improper political interference? Just a gut feeling, reinforced by the traditions and practices of the Department of Justice and the American political tradition during the post-Watergate era. The Department generally aggressively investigates and prosecutes public corruption. That is a policy of longstanding. In our hypothetical, I assume that President Obama does not want DOJ to stop investigating all public corruption cases. So, I have to assume, unless otherwise informed, that Obama wants this case closed because Governor X is a friend and a Democrat. To me, that is not a proper reason, even if it is a policy and even if President Obama has the power to impose it.
There are a whole host of hypotheticals in between the two examples that I have given above, and they can happen at different levels within DOJ. It should not be assumed that all attempts at political interference based on policy choices are legal. If the President orders the Attorney General not to investigate or prosecute crimes against gays, that is presumably a policy choice, albeit an improper and illegal one. On the other hand, President Reagan was entirely within his rights to change DOJ policies and positions on the use of quotas in DOJ civil rights litigation when he became President, although in doing so he infuriated career DOJ civil-rights attorneys. Reagan ran on an anti-quota platform and he was entitled to run DOJ in accordance with this policy choice.
Policy choices and politics are an inevitable part of the DOJ. Determining when politics crosses the line is not always as easy as it seems. What should the Attorney General do when the President persists in ordering him to follow a policy that the Attorney General wholeheartedly disagrees with? If it is important enough to the AG, he should have the guts to quit.
Folo reports here that AUSA Tom Dawson has retired from the U.S. Attorney’s Office in Oxford, Mississippi. Dawson was my colleague at the Office of Independent Counsel-Whitewater and had an illustrious 36-year career as an AUSA. More recently Tom served as lead prosecutor in the Dickie Scruggs case. A consummate professional, Tom Dawson exemplifies the very finest non-partisan qualities and traditions of the Department of Justice prosecutorial corps. I’m truly sad to see him go and wish him the very best in all of his future endeavors.
Magistrate Judge Ellis imposed even heavier restrictions. In addition to the previous 24-hour surveillance, Madoff will now have his transportable valuables subject to monitoring and inspection. Plus, the terms of the SEC injunction are to be made part of the bond conditions. The Government also moved, with Madoff’s consent, to extend the 30-day Speedy Trial Act deadline in which it must file an indictment or dismiss the complaint. The Government’s motion states that it is in talks with Madoff with a view toward possible disposition of the case.
The U.S. Attorney’s Office for the Southern District of New York dismissed all criminal charges yesterday against former OMB Director David Stockman and his co-defendants. Paul Barnaba, one of the co-defendants, is my client. I will post some extended thoughts on this prosecution at a future time. Here for now is David Glovin’s Bloomberg News story and my law firm’s press release. Below is a statement that Adrienne Urrutia Wisenberg and I put out on behalf of Paul Barnaba.
“It is always a victory when justice is served as it was, eventually, in this case. When the headlines fade, and participants move on to their next case, Paul Barnaba will be left to pick up the pieces of his life. We are overjoyed for Paul, but we also acknowledge the toll this process has taken on him. Our Constitution is supposed to protect the innocent, and even though the eventual outcome of the case was correct, the public likely has no idea what sort of devastation an accusation like this can cause to an ordinary individual. Paul Barnaba is 39 years old. He was a salaried employee at Collins & Aikman. He had no stock options or ownership interest in the company. The investigation and indictment cost him virtually everything—his peace of mind for years of his life, his profession, and, until today, his faith in a system that is supposed to be built on the presumption of innocence.”
With Joey Langston sentenced, the other shoe is about to drop in Scruggs II. On Tuesday, WLBT reported that former Hinds County DA Ed Peters has surrendered his law license. Tuesday evening, NMC at folo posted (.pdf) an order from US Magistrate Judge S. Allan Alexander seizing $425,000 from Peters; the funds are already in the possession of the United States Marshals Service:
The court is satisfied that based on the Verified Complaint For Forfeiture In Rem, as well as the Verification of the Complaint by Samuel D. Wright, Assistant United States Attorney for the Northern District of Mississippi, United States Department of Justice, filed with this court on December 31, 2008, there is probable cause to believe that the Defendant property is subject to forfeiture pursuant to 18 U.S.C. § 981(a)(1)(c) because it is property that constitutes or is derived from proceeds traceable to violations of 18 U.S.C. § 1343 (Wire Fraud), which constitutes a “specified unlawful activity” by virtue of 18 U.S.C. § 1956 (c)(7)(A) and 18 U.S.C. § 1961 (1), collectively.
The Daily Journal has more here on the underlying complaint. Nothing has been announced yet, but it’s apparent that Peters has reached a plea agreement with federal prosecutors. This means that the hammer is about to drop on Judge Bobby DeLaughter and (again) on Dickie Scruggs. Will Scruggs II also ensnare Trent Lott and the mysterious P.L. Blake? Stay tuned.
Judge Ed Prado’s 104 page opinion affirms the guilty verdicts in toto. The case is remanded for re-sentencing, however, in light of an improper enhancement for substantially jeopardizing a financial institution. Jerry Smith and District Judge Alia Ludlum (sitting by designation) rounded out the panel.
Judge Griffin Bell died of pancreatic cancer yesterday, at 90. Undoubtedly one of the finest Attorney Generals in U.S. History, Bell was fiercely independent and a legendary supporter of individual privacy rights while in office and afterwords. Patrick Lyons’ N.Y. Times Obituary, buried here on A18, is excellent, but fails to mentione Bell’s successful stand against Labor Secretary Ray Marshall’s plan to implement a uniform nationwide identity card.
Bernard Madoff’s wife sent some of the couple’s valuables to family members and friends, allegedly in violation of an injunction obtained by the SEC in its civil case against Madoff. Ergo, the SDNY U.S. Attorney’s Office wants Madoff’s bond revoked, on grounds that he is a flight risk and and an economic danger to the community. Magistrate Judge Ronald Ellis seemed skeptical at yesterday’s hearing and wants to see some law. The Government’s brief is due today, and Madoff has through Wednesday to respond. Alex Berenson’s NYTimes story is here. I’ll be discussing this issue on CNBC’s Power lunch today, sometimes between 12:15 and 12:30 PM Eastern Time.
The Washington Post has the story here. Apparently the pace of the federal criminal inquiry quickened after President-Elect Obama announced Governor Richardon’s nomination. FBI Special Agents assisting the Senate in its nominee vetting process purportedly alerted the Obama transition team to the seriousness of the allegations under investigation. According to the Richardson and Obama camps, there was no pressure from the Preseident-Elect on Richardson to withdraw.
Scott Horton of Harper’s gives this less than charitable take on former Attorney General Alberto Gonzales’ tenure, in light of Gonzales’ recent WSJ interview. The interview was covered/summarized here in yesterday’s WSJ. Gonzales’ basic complaint/defense is that he was not, as White House Counsel, the evil mastermind of the Bush administration’s War on Terror policies; he was one of several lawyers who had a willing hand in formulating those policies. Horton believes that Gonzales lacked a critical lawyering skill–the ability to say “no” to a client. It is hard to argue with this. Gonzales never seemed fully to grasp the critical distinction between the role of White House Counsel and the role of Attorney General. The Attorney General must be a loyal Executive Branch official, but he is not the President’s personal lawyer. He also has an independent duty to uphold the law, including the Constitution. Given the White House’s truly breathtaking claims of Executive Privilege, some of which apparently trumped explicit criminal sanctions contained in federal statutory law [see FISA], and given Gonzales’ role in formulating/defending those claims, his unsuccessful transition from White House Counsel to Attorney General was a foregone conceptual conclusion. This is particularly so, given Gonzales’ longstanding role as Governor and President Bush’s yes man.
Even today Gonzales seems clueless as he discusses his famous hospital visit to Attorney General Ashcroft’s side, where he stood off against Deputy AG Jim Comey and the FBI’s Bob Mueller. According to Gonzales, Ashcroft (who had temporarily ceded the AG’s powers to Comey during gallbladder surgery) was “as lucid as I’ve seen him at meetings in the White House.” Really? Was somebody secretly spiking Ashcroft’s punch during Cabinet meetings?
And in the believe it or not category, Gonzales is angry that Comey gave his famous congressional testimony about the hospital visit showdown without having had ”the decency to notify anyone” beforehand. I’m not making any of this up.