Public Corruption Prosecutions in the U.S. – An Overview of Cases

Involving Forfeiture and Restitution Issues

U.S. federal prosecutors prosecute crimes by gov’t officials at all levels• Local officials like mayors and city or

county commissioners and state prosecutors and police officers

• State officials like governors, members of state legislatures, state officials like election officials and cabinet officials like tax officials and state police officers

• Federal officials– Federal judicial corruption– U.S. Congressmen and Senators or staff

members – Federal contracting officers– Intelligence officials– Cabinet Secretaries– State Department officials involved in

immigration visas

Statutes Used to Prosecute Official Corruption

• Bribery and honest services fraud• Money laundering• Conspiracy to commit federal crimes• RICO – federal and state law predicates• Income tax evasion and false returns• False statements and omissions and False

disclosures– Financial Disclosure statements– Campaign reports– False statements to investigators and to congress

Importance of Restitution and Forfeiture Tools

• Disgorge profits

• Deter

• Punish

For most corruption cases, the things of value given are small

• Trips--foreign and domestic• Expensive watches• Free home improvements • Golf, meals and entertainment• Cash –

– direct payments – payments of mortgages and bills and sales at inflated values – payments to trusted courthouse employees– jobs for family members and friends

• Lobbyists contracts for family and friends• “event coordinators” or public relations businesses

– “consulting fees” for gov’t officials allowed to have outside income

• Judicial corruption– Typically numerous small bribes

• Local police – Typically numerous small bribes or – Excessive force or other civil rights violations– Sexual misconduct

• Mayors and City officials– Typically small cash payments, improvements

to houses, “little show” jobs

• Federal judges, prosecutors or cabinet or agency officials– Relatively rare– False disclosures or conflicts of interest– Voucher fraud

• Other Federal officials – Contracting officers –

• future employment or family members employment• Sometimes cash or having bills paid directly

Exceptions

• Jack Abramoff and Michael Scanlon• U.S. Congressman Randy “Duke”

Cunningham • U.S. gov’t officials in Iraq involved in Iraq

reconstruction contracts• Some officials who sell national security

information • Narcotics-related corruption –

– Criminal Law and immigration enforcement officers

Who investigates? Who prosecutes?

• By Department of Justice policy, Trial Attorneys who report to the Attorney General and the investigative agencies

• By Department of Justice policy, Special Counsel appointed by the Attorney General and the investigative agencies

• By statute, independent counsel appointed by the Court and the investigative agencies

Jack Abramoff

Jack Abramoff

• Following guilty plea of business partner Michael Scanlon, pleaded guilty in Washington, D.C. in Jan 2006 to – conspiracy to commit

• Honest services fraud and bribery • Defrauding clients by mail and wires (phones and emails)• Concealment

– Defrauding clients• Failing to disclose that he would recent 50 percent of profits of

company he recommended to his clients to provide “grass roots services”

– Tax evasion • Unreported income and• Improper deductions

Jack Abramoff

• Also pled guilty in Jan. 2006 in federal court in Miami, FL to bank fraud involving purchase of Sun Cruz Casino

• Sentenced in March 2006 to 60 months in prison • Ordered to pay $19 million in restitution to the

banks• Surrender date continued while he cooperates

• On charges pending in Washington, D.C. faces – prison of up to 91/2 to 11 years which will

likely be served concurrently;– restitution payments to his clients of

$25 million;– restitution to IRS of approx. $1.8 Million

• How can the gov’t recover the $47 million from Abramoff?– Joint and several liability with co-conspirators– Non-dischargeable in bankruptcy– Can be collected at any time in his lifetime

Restitution

• For defrauding his clients - will be treated as restitution to client - victims who were defrauded administered by the court and probation

• For his corruption crimes – not ordered but not likely to be large as to any individual recipient

Effects of Abramoff and Scanlon Guilty Pleas so far

• On-going criminal investigations– March 2006 Guilty Plea of Tony Rudy, former lobbyist

and Deputy chief of staff of House Majority Whip Tom DeLay

– U.S. V. Safavian, USDC

• Voluntary return of campaign contributions from Abramoff

• Amended FEC filings to report in-kind contributions and reimbursement of expenses for use of Abramoff’s luxury sports boxes for fundraisers

Cong. Randy “Duke” Cunningham from California

– $2.43 million from 3 business operators seeking defense department contracts

• Huge profits on a house and a boat, a Rolls Royce, rugs, furniture, cash, meals, travel expenses, and more

Cunningham Forfeiture

• As part of his plea agreement– Pleaded guilty to tax evasion and bribery

conspiracy – Agreed to cooperate in other corruption

investigations and investigations of people he admitted publicly bribed him

– Agreed to forfeit certain assets which are being sold

• public auctions or • public sales

• Was sentenced in March 2006 to 8 years and 4 months – prosecutors asked for 10 years– Defense argued prior war service, alcoholism

and depression

Developments in the on-going Cunningham investigation so far

• Mitch Wade, one of the bribe payers, has plead guilty to bribery and is cooperating with federal prosecutors in Washington, D.C.