Harry Cassin Publisher and Editor

Andy Spalding Senior Editor

Jessica Tillipman Senior Editor

Richard L. Cassin Editor at Large

Elizabeth K. Spahn Editor Emeritus 

Cody Worthington Contributing Editor

Julie DiMauro Contributing Editor

Thomas Fox Contributing Editor

Marc Alain Bohn Contributing Editor

Bill Waite Contributing Editor

Shruti J. Shah Contributing Editor

Russell A. Stamets Contributing Editor

Richard Bistrong Contributing Editor 

Eric Carlson Contributing Editor

Bill Steinman Contributing Editor

Aarti Maharaj Contributing Editor

FCPA Blog Daily News

« Another LatiNode Exec Jailed | Main | Semi-Tough Compliance Programs »

Not So Fast: Are DOJ Flops Always Failures?

On the occasion of Roger Clemens' acquittal Monday for perjury, Nathan Vardi of Forbes catalogued failed white collar prosecutions he said evidenced the DOJ's abuse of 'prosecutorial discretion' and lack of 'good judgment.'

He mentioned Ted Stevens, John Edwards, Frank Quattrone, Richard Scrushy, and David Stockman -- famous defendants all acquitted at trial or exonerated on appeal.

Vardi also blasted the DOJ's FCPA unit. 'While the government has been very effective at securing settlements from big corporations,' Vardi wrote, 'the Justice Department’s track record of holding individuals accountable for the alleged crimes has been terrible.'

He cited John O’Shea's bench-directed acquittal, the post-verdict dismissals for Keith Lindsay, Steve Lee, and Lindsey Manufacturing, the Africa sting dismissals, and the sputtering end to James Giffen's prosecution.

Is Vardi's indictment of the DOJ and its FCPA unit fair?

In O'Shea's case, the government's chief witness from Mexico showed up for the trial somehow ignorant of all the important facts. We can only speculate why his memory apparently grew worse as the trial grew closer.

The Lindsey prosecution was tainted by government misconduct. Was it pervasive, chain-of-command malfeasance, or did a single prosecutor go rogue? There's a big difference.

The Africa sting prosecution, as everyone but the DOJ knew from the start, was a dumb idea and never should have been green lighted. Stings stink, as two Africa sting juries made clear. Give Vardi credit for that citation.

But in 'hero' Giffen's case, the DOJ looked more like a victim than a villain -- sucker punched by another government agency called the CIA. The public (like the DOJ itself?) may never know what really went on inside Kazakhstan's presidential palace -- national security and all that. But pinning all the blame on the DOJ for Giffen's eventual exoneration may be a stretch.

Vardi didn't mention FCPA convictions during the past few years. Here are some:

Seven former executives from Control Components Inc. pleaded guilty to FCPA charges. Four LatiNode leaders are doing time for misdeeds in Honduras. And seven (or is it now eight?) Miami-based  telecoms execs were jailed for bribing Haitian officials -- one for fifteen years after a jury trial, the longest FCPA-related prison term ever imposed.

Remember the guilty pleas by Jack Stanley, Jeffrey Tesler, Wojciech Chodan, and Ousama Naaman? They're all in federal prison now. The names Leo Winston Smith, Charles Jumet, Jim Bob Brown, Jason Edward Steph, and John Webster Warwick may come to mind. They pleaded guilty to FCPA offenses too. And in Hollywood, a real-life jury convicted movie producers Gerald and Patricia Green, who served his-and-her prison terms.

So is the DOJ's record in FCPA cases really 'terrible,' as Vardi said? Or is it just mixed?

Vardi was right about one thing. Some criminal defendants walk. Juries sometimes have reasonable doubt about their guilt, and vigilant judges sometimes toss cases if defendants aren't getting a fair trial.

But aren't those 'failures' exactly what's supposed to happen in a healthy criminal justice system?

You could also call them successes.

Reader Comments (2)

Maybe the Government's chief witness (who didn't show up from Mexico) but from almost 2 years in jail/confinement decided to tell the truth under oath, as opposed to what the Government coached him to say in his 20 plus interviews.
June 20, 2012 | Unregistered Commenteroneofthelittlepeople
On the Lindsey case, I've written that the prosecutors deserved better, but I can at least understand the decision.

The O'Shea dismissal is something different altogether. If you don't believe that, read the transcript. There were two transactions at play: the main witness gave truthful testimony that he wasn't a part of the first---which is where the Judge got his "no nothing" moniker for the witness---but for the second, the witness was right in the middle of it.

Plus the physical evidence. Oh, yes, there was actual physical evidence. A spreadsheet of the bribes was given by the witness to O'Shea. The spreadsheet was later found on O'Shea's computer.

So no, I can't count O'Shea as a defeat. It was like a game stolen by a referee's bad call.

It is good, though, to remember the victories too. Nice article!
June 22, 2012 | Unregistered CommenterHoward

PostPost a New Comment

Enter your information below to add a new comment.

My response is on my own website »
Author Email (optional):
Author URL (optional):
All HTML will be escaped. Hyperlinks will be created for URLs automatically.