KANAWHA PERRYN. C STATE BUREAU OF INVESTIGATION

SPECIAL INVESTIGATIONS UNIT

Public Corruption:Bribery

2

Instructor Background

Education: B.A. in Sociology from NC State University 1991; M.A. in Sociology from UNC at Greensboro 2007

Experience: Law enforcement officer since 1992. Special Agent with the NCSBI for 20 years. Currently the Special Agent in Charge of the SBI Special Investigations Unit.

Certified Fraud Examiner (CFE) & Certified General Instructor for State of NC

Serve as Advisory Board Member for the NC Administrative Office Management Program (AOMP) and Law Enforcement Executives Management Program (LEEP).

Past-president of NC Internal Affairs Investigators Association & US Army veteran.

3

Overview

Defining briberyReviewing examples of bribery casesFactors leading to bribes Potential harm from bribesDifficulties in identifying bribery casesEfforts to detect Investigating Possible legal ramifications for involvement

in bribery cases

4

What is Bribery?

Bribe: Any money, goods, right in action, property, thing of value, or any preferment, advantage, privilege or any promise or undertaking asked, given or accepted with a corrupt intent to induce or influence action, vote, or opinion of a person in any public or official capacity.

In legal terms, bribery is described as the act of accepting or offering something of value, such as money, in return for a certain action or influence on a government official. Bribes can take many different forms, but are always intended to influence or alter the action of various individuals.

Solicitation of Bribe: Asking, enticing, or requesting of another to commit the crime of bribery.

5

What is Bribery continued?

When someone with power seeks payment in exchange for certain actions, that person is said to be peddling influence.

Both the recipient of the bribe and the provider of the bribe can be charged with the offense of bribery and can be found guilty of the crime independently of the other.

To be guilty of bribery, the thing of value does not necessarily have to be exchanged or received. The crime occurs once the offer is made or there is an agreement to accept the offer.

When public officials are involved, a bribe does not need to be harmful to the public interest in order to be illegal.

6

Similar, but Different

Illegal gratuity vs bribery:An illegal gratuity does not require an

intent to influence or be influenced. The gratuity is a reward for an action that a public official has already taken, or for an action that the public official has committed to take in the future.

The bribery statute, however, requires proof of a quid pro quo, that is, an intent on the part of the public official to perform acts on his payor’s behalf.

7

More Definitions

Extortion: The obtaining property from another induced by wrongful use of actual or threatened force, violence or fear. Can be threats of physical harm, accusation of criminal offense or threat to expose a secret or information that may be harmful.

Corruption: Act done with an intent to give some advantage inconsistent with official duty and the rights of others. The act of an official or fiduciary person who unlawfully uses his station or character to procure some benefit for himself or another person, contrary to the duty and rights of others.

8

Examples of Bribes

Bribes can come in the form of any of the following: tips, gifts, perks, skim, favors, sex, discounts, waived fee/ticket, free food, free ad, free trip, free tickets, sweetheart deal, kickback, payback, funding, inflated sale of an object or property, lucrative contract, donation, campaign contribution, fundraiser, sponsorship/backing, higher paying job, stock options, secret commission, or promotion.

9

North Carolina Cases

DAVID LEE BRADY and JAMES ALBERT PERRY, JR. pled guilty to conspiracy to commit extortion and to corruptly give anything of value to a public official in connection with the business of a state government receiving federal funds. In order to expedite the permit process, PERRY, BRADY, and others entered into an agreement with a high-level DENR official to use his influence to assist Brady and Perry with permit issues in exchange for the promise of payments totaling approximately $196,000.

NC Representative Michael Decker Pleads Guilty to

Conspiracy-Former N.C. Rep. Michael Decker, Sr. pleaded guilty in federal court to crimes associated with efforts to elect Jim Black to another term as speaker of the House in 2003. Decker solicited and agreed to accept $50,000 and other gifts in return for switching parties and supporting a particular candidate for speaker of the House.

.

10

North Carolina Cases

Charlotte Mayor Patrick Cannon charged with taking bribes. He was accused of soliciting and accepting more than $48,000 in cash, airline tickets and other items of value in meetings with at least seven undercover agents pretending to explore projects in Charlotte, North Carolina.

Former House Speaker Jim Black pleads Guilty To Corruption-Black accepted about $25,000 in cash on four occasions between February 2002 and December 2005. In exchange for the money, prosecutors said, Black helped push for three laws of interest to chiropractors.

11

Cases Continued

“Easley ‘go to guy' Ruffin Poole indicted on 51 counts of corruption”. Poole extorted money from key Easley supporters and was charged with bribery, use of the mail in aid of racketeering, and depriving North Carolina citizens of his "honest services."

Poole was a silent investor in development projects pushed by developers in Wilmington and Charlotte, making tens of thousands of dollars in profits on projects that he influenced by pressing government officials for action on environmental permits on the projects he invested in.

Other cases: LEOs, Legislators, & Prosecutors

12

Factors Leading to Bribes

OpportunityLow chance of getting caughtIncentiveGreed (monetary or some other reward)Desire to gain power or position Disregard for law

13

Potential Harm from Bribes

1. Undermines democracy and the rule of law.2. Can lead to violation of human rights.3. Can distort markets.4. Can erode the quality of life.5. Allows organized crime, terrorism, and other

threats to human security to flourish.6. Can be harmful to organization and employee

morale.7. Damage to reputation of governmental offices

and private companies.8. Can erode confidence and trust in the operation

of governmental officials.

14

Difficulties in Detecting Bribes

Becoming aware of bribes will often require inside information from someone involved or suspicion by someone close to the incident.

Bribes typically are done in secret. Whatever happens between parties is generally not written on a piece of paper, and many times cash is exchanged to prevent creating a paper trail.

Bribery and corruption typically arise out of relationships between people, so in order to detect them, management must often be aware of the personal relationships between employees and outside parties. That is clearly a difficult task, and often nearly impossible.

15

Combating Bribes

The key to finding corruption schemes is monitoring relationships and looking for other clues.

The most effective way to do this is to have a mechanism in place for reporting suspicions of fraud. Anonymous fraud hotlines are very effective in this regard.

Hotlines should not be restricted to only employees. Customers and vendors should also be made aware that the company has a hotline and that they are encouraged to report anything suspicious. An employee with an “unusual” relationship with a vendor might not be discovered internally, but it’s possible that someone at the vendor’s location would be willing to report their suspicions if given a way to do so.

16

Combating Bribes

Generally, management should be on the lookout for small clues that might point to a problem. Even though an off-books fraud is difficult to detect, often there may be other signs that indicate an issue. Maybe an employee is uncharacteristically agitated or has started working unusual hours. There could be an abrupt change in the direction or decision that someone was leaning towards or would typically lean towards.

In addition to hotlines, companies are advised to rotate duties and account management between employees. By rotating responsibilities, employees will have a decreased chance of developing a close relationship with a supplier or customer who might suggest a fraud scheme.

 Report to appropriate personnel or authorities if you suspect something is amiss.

17

Investigative To Do’s

Examples of Things to Do and Look For When Investigating Bribes. Detailed witness and subject interviewsCovert operations *Bank records *Phone and email records *Accounting/payroll recordsPending legislationContractsBoard/Committee meeting notes Campaign contributionsDocumentation of findings *(Can require court orders, subpoenas, search warrants and /or consent)

18

Legal Matters

Prosecution: State vs Federal

State prosecutions: Prosecuted by state District Attorneys or NC Attorney General’s Office.

Federal prosecutions: Prosecuted by United States Government by United States Attorneys’ Offices.

For individuals, penalties can result in fines and imprisonment; for organizations it can result in fines.

19

N.C. Criminal Statutes

§ 14-217.  Bribery of officials. If any person holding office, or who has filed a notice of candidacy for or been nominated for such office, under the laws of this State who, except in payment of his legal salary, fees or perquisites, shall receive, or consent to receive, directly or indirectly, anything of value or personal advantage, or the promise thereof, for performing or omitting to perform any official act, which lay within the scope of his official authority and was connected with the discharge of his official and legal duties, or with the express or implied understanding that his official action, or omission to act, is to be in any degree influenced thereby, he shall be punished as a Class F felon.

Can result in removal from office for public officials. § 14-218. Offering bribes. If any person shall offer a bribe,

whether it be accepted or not, he shall be punished as a Class F felon.

20

18 U.S.C. § 201: "The first crime is bribery, which requires a showing that something of value was corruptly given, offered, or promised to a public official (as to the giver) or corruptly demanded, sought, received, accepted, or agreed to be received or accepted by a public official with intent “to influence any official act” or in return for “being influenced in the performance of any official act”.

The second crime is illegal gratuity, which requires a showing that something of value was given, offered, or promised to a public official (as to the giver), or demanded, sought, received, accepted, or agreed to be received or accepted by a public official (as to the recipient), “for or because of any official act performed or to be performed by such public official.”

Can be disqualified from holding any office of honor, trust, or profit under the U.S government.

U.S. Criminal Statute

21

Examples of Legal Ramifications

Former State District Judge, was sentenced to 72 months in prison and ordered to pay $6,777,270 in restitution after accepting money and other consideration from attorneys in civil cases pending in his court in return for favorable pre-trial rulings in certain cases.

An elected Hammond City Councilman, was sentenced to 42 months in prison for accepting $10,500 in bribes.

Wisconsin Man Sentenced in Ho-Chunk Indian Nation Bribery was sentenced to 120 months in prison and ordered to pay $162,854 in taxes to the IRS after conviction on bribery, tax, and obstruction charges.

Former New Orleans Mayor Sentenced for Conspiracy, Bribery, Honest Services Wire Fraud, Money Laundering and Tax Violations; sentenced to 120 months in prison, ordered to pay $84,264 in restitution to the Internal Revenue Service and forfeit $501,200.

Former County District Attorney Sentenced in Connection with South Texas Bribery Scheme to 156 months in prison for favorable acts of prosecutorial discretion.

22

Closing

Questions

Contact Information Kanawha Perry, Special Agent in Charge North Carolina State Bureau of Investigation 3320 Garner Road, Raleigh, NC 27626 919-582-8510 kperry@ncdoj.gov

23

References

Blacks’ Law Dictionary, Special Deluxe Fifth Edition (1979) West Publishing Company

Carrington, D. (2006, August 2). Decker Pleads Guilty to Conspiracy. Retrieved from http://www.carolinajournal.com/exclusives/display_exclusive.html?id=3486

Deming, S. H. (2012, April 3). FCPA: Distinguishing Bribes and Illegal Gratuities. Retrieved from http://www.deminggroup.com/blog/2012/04/fcpa-distinguishing-bribes-and-illegal-gratuities.shtml

Easley 'go to guy' Ruffin Poole indicted on 51 counts of corruption. (2010, January 21). Retrieved from http://www.newsobserver.com/2010/01/21/296703_easley-go-to-guy-ruffin-poole.html?rh=1#storylink=cpy

Former House Speaker Jim Black Pleads Guilty To Corruption. (2007, February 15). Retrieved from  

http://www.wsoctv.com/news/news/former-house-speaker-jim-black-pleads- guilty -to-co/nHCPz

24

References

Fraud Examiners’ Manual 2014 US Edition, Association of Certified Fraud Examiners

http://www.irs.gov/uac/Examples-of-Public-Corruption-Investigations-Fiscal-Year-2013

http://www.irs.gov/uac/Examples-of-Public-Corruption-Investigations-Fiscal-Year-2014

 Smith, Jessica. (2012) North Carolina Crimes: A Guidebook on the Elements of Crime, Seventh Edition, School of Government, The University of North Carolina at Chapel Hill

Two Defendants Sentenced in Public Official Bribery Case. (2010, February 10). Retrieved from http://www.justice.gov/usao/nce/press/2010/2010-feb-10.html

Zajac, A and Marois, M.B. (2014, March 27). Charlotte, N.C., Mayor Charged With Taking Bribes, Quits. Retrieved from http://www.bloomberg.com/news/articles/2014-03-26/charlotte-n-c-mayor-charged-with-taking-bribes