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Entries in William Jefferson (41)

Monday
Jun152009

Jefferson's Judge Keeps Things Moving

Opening arguments start today in the federal criminal trial of former congressman William Jefferson for corruption and violating the Foreign Corrupt Practices Act. During three days of jury selection last week, the tone from the bench was strictly no-nonsense. A Louisiana TV station carried this revealing report:

One potential juror who was interviewed told the court she believed “large sums of money in a freezer is odd.” Jefferson’s Defense Attorney Robert Trout, moved to strike that juror, but Judge T.S. Ellis denied the request, saying the juror’s opinion does not presume guilt or innocence.

Later Trout requested the judge to ask potential jurors if they’re addicted to websites like Facebook and Twitter or online blogs. The judge once again denied the request, saying “I think it’s a silly question, it’s like asking people, ‘do you use a phone?’”

Trout also requested that the judge ask potential jurors whether a congressman can be effective while on private business deals. Ellis denied the request, saying he is not going to start trying the case during jury selection. . . .

Who's that judge? He's Thomas Selby ("T.S.") Ellis III, 69, (Princeton BSE, Harvard JD), a former Naval aviator and hard-charging litigator from Hunton & Williams. He was nominated to the bench by Ronald Reagan and began serving in 1987. He assumed senior status in April 2007 but still hears cases in both the Eastern and Western Districts of Virginia. And he sometimes sits by designation on the United States Court of Appeals for the Fourth Circuit.

The government told Judge Ellis last week that its key witness, Lori Mody, isn't likely to testify unless she's needed for rebuttal. Her complaints to authorities first triggered the investigation into Jefferson. The $90,000 in marked bills found in his freezer came from her. She also made secret recordings of some of their conversations. Those tapes will still be admissible at the trial, along with evidence about the cash in the freezer.

Bruce Alpert at The Times Picayune polled a few former federal prosecutors. They think the government's case isn't airtight. Mody's absence hurts. And Jefferson wasn't always explicit in their taped conversations. His lawyers will also argue that his public role and private acts should be viewed separately. The cash in the freezer? Explaining it is Jefferson's biggest problem. Still, according to Alpert's unscientific results, the most likely outcome is a hung jury. His story is here.

Read all our posts about William Jefferson here.
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Wednesday
Jun102009

More On Bourke and Jefferson

First Frederic Bourke. A witness testifying for the government this week at Bourke's trial in New York may have hurt the prosecution's case. Christine Rastas, who worked for Viktor Kozeny in Azerbaijan, said her boss told Egyptian businessman Shafik Gabr about bribing Azeri officials. Kozeny's conversation with his investor took place in a hotel bar in Moscow. Crucially, Bourke wasn't there, the witness said. And she doubted whether Kozeny needed to pay bribes at all. Local officials, she said, typically took legal stakes in privatization projects.

As Bloomberg's David Glovin reported here, her testimony could end up helping Bourke. I had worked on other projects where the government was an equity partner, Rastas, who is testifying for prosecutors in exchange for immunity, told jurors. So if one of Kozeny's insiders didn't know about the bribes, why should Bourke?

Rastas, who worked at the U.S. Defense Department before joining Kozeny, also recalled helping his security chief, John Pulley, flush some meeting notes down a toilet. She thought the notes were about trusts Kozeny was creating for Azeri officials.

Prosecutors say Bourke, 63, invested in the planned privatization of Azerbaijan's state oil company in 1998 despite knowing Kozeny would pay bribes. The privatization didn't happen and the dozen or so investors, including Bourke, lost a combined $350 million. In 2005, Bourke was charged with conspiracy to violate the Foreign Corrupt Practices Act, money laundering and lying to federal investigators. Kozeny was also charged but has stayed in the Bahamas to escape prosecution. New York state prosecutors have also charged him with stealing $180 million from his investors. Bourke faces 30 years in prison if convicted. He denies knowing about the bribes.

Read David Glovin's reports on the trial for Bloomberg here.

Read all our posts about U.S. v. Kozeny and the prosecution of Frederic Bourke here.

* * *
And William Jefferson. His trial started this week with jury selection. Federal district court judge Tim Ellis called about 100 potential jurors to his courtroom in Alexandria, Virginia. The pool will be narrowed to 12 regular jurors and four alternates. The trial of the former congressman, like Bourke's, is expected to last about a month. Judge Ellis said he's not planning to sequester the jury. Bruce Alpert's report for The Times Picayune is here.

Jefferson, 62, faces 16 counts including violating the FCPA, soliciting and accepting bribes, wire fraud, money laundering and obstruction of justice. He could be sentenced to 20 years in prison if found guilty.

In his report, Alpert said: Before the trial, Jefferson's attorneys had asked Ellis for a change of venue, accusing the Justice Department of trying the case in Virginia because it has a smaller pool of African-American jurors than there would be in either Washington, D.C., or New Orleans, where they argued the case should be heard. Ellis rejected the argument. The pool of potential jurors Tuesday was overwhelmingly white with only a handful of African-Americans. Jefferson is an African-American Harvard-educated lawyer and nine-term member of Congress.

Read all our posts about William Jefferson here.
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Monday
Jun082009

Big Day For The FCPA

History will be made with today's opening gavel in William Jefferson's federal trial. It will mark the first time a former member of congress has been prosecuted under the Foreign Corrupt Practices Act, and the only time the country has seen two FCPA trials staged simultaneously -- Jefferson's in Alexandria, Virginia and Frederic Bourke's in New York City.

Jefferson, 62, faces up to 20 years in prison. He's accused of violating the FCPA by arranging bribes to African officials to win contracts for his family's companies, and with soliciting and accepting bribes, wire fraud, money laundering and obstruction of justice. He lost an election last year for a 10th term in the House of Representatives from a district that includes New Orleans.

Frederic Bourke's trial started last week. He's accused of investing in a deal in Azerbaijan that he knew involved paying bribes to officials there. He faces up to 30 years in jail for violating the FCPA, money laundering and lying to federal investigators.

Jefferson's case caused a stir when it started in 2005. The FBI's raid on his congressional office was the first one ever. The Washington D.C. Circuit Court of Appeals said the raid was constitutional but the way the FBI reviewed Jefferson's documents wasn't. The tainted evidence can't be used at his trial. It was also the first time U.S. law enforcement agencies had raided the U.S. residence of an elected foreign official -- a home built in Maryland by Nigeria's then vice president, Atiku Abubakar, for his wife Jennifer Douglas.

For Jefferson and his family, these are terrible times. His brother Mose Jefferson, his sister Betty Jefferson, and his niece Angela Coleman, have all pleaded not guilty to federal corruption charges in Louisiana, where they helped run the family's political machine. On top of that, Jefferson's other sister, Brenda Jefferson Foster, has already pleaded guilty in the Louisiana case and will testify against her relatives. A judge has told the other indicted family members not to contact her. Their trial is scheduled to start in August.

Bruce Alpert at The Times-Picayune has a nice run-up to Jefferson's trial here.

Read all our posts about William Jefferson here.

Read all our posts about U.S. v. Kozeny and the prosecution of Frederic Bourke here.

* * *
Resources that work. The James Mintz Group's latest newsletter has a nifty FCPA map. It marks all the countries named in enforcement actions during the past 10 years. Industry segments are depicted, along with the size of the financial penalties imposed. It reveals in a glance compliance red flags around the globe. The newsletter (with the fold-out FCPA map at pages 3 and 4) can be downloaded here.
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Wednesday
Jun032009

Jefferson On Trial, Soon

Former Congressman William J. Jefferson's trial for violating the Foreign Corrupt Practices Act and other federal laws will start on June 9 in Alexandria, Virginia. Judge Tim Ellis this week granted Jefferson a one-week delay. He's charged in a 16-count indictment with FCPA violations, soliciting and accepting bribes, wire fraud, money laundering and obstruction of justice. He could be sentenced to a maximum of 235 years in prison if convicted on all counts.

Jefferson's case is best known for allegations that he hid $90,000 in the freezer at his Washington home. The indictment said it was part of $100,000 provided in August 2005 by the government's cooperating witness. It was supposed to be used to bribe a Nigerian official to steer telephone service-related business to Jefferson's family members. "The cash was separated into $10,000 increments, wrapped in aluminum foil, and concealed inside various frozen food containers," according to prosecutors.

Jefferson's lawyers have said the money "was transmitted to Mr. Jefferson by the government's cooperating witness during the course of the FBI's sting operation so that he would pass it to a foreign government official," the then vice president of Nigeria. "But Mr. Jefferson did not do that. Instead, the marked funds were recovered in his home."

His alleged co-conspirators were Vernon L. Jackson, a Louisville, Ky., businessman, and Brett M. Pfeffer, a former Jefferson congressional staff member. Jackson was sentenced to 87 months in prison after pleading guilty to conspiracy to commit bribery and paying bribes to a public official. Pfeffer was sentenced to 96 months in prison after pleading guilty to conspiracy to commit bribery and aiding and abetting the solicitation of bribes by a member of Congress.

Jefferson had argued last year that except for the two FCPA charges, the grand jury's 16-count indictment violated his rights by relying on evidence protected by the absolute privilege in the Constitution's Speech or Debate Clause (Article I, Section 6, Clause 1). In November, the Fourth Circuit Court of Appeals rejected his arguments. Last month, the Supreme Court refused to hear his appeal, clearing the way for the trial.

Jefferson, 62, lost an election last year for a 10th term in Congress. His district included New Orleans. Before being indicted, he had compiled an outstanding record of public service. He was the first African-American elected to Congress from Louisiana since Reconstruction. He graduated from Southern University A&M College and Harvard Law School, and he also holds an LLM in tax from Georgetown.

He was raised in northeast Louisiana before he moved to New Orleans and rose to power. A great article by Gordon Russell in The Times-Picayune (one of our favorite papers) said this about his childhood:

Life in the Delta during the 1940s wasn't easy: Though the family owned a small farm, the Jefferson children had to pick cotton and the large family was crammed into a five-room house.

In town, racial oppression was rigid, and may have launched [Jefferson's older brother's] flight to Chicago. William Jefferson's recent book, "Dying Is the Easy Part" -- which is billed as fiction but reads like an autobiography -- features a chapter that centers on an older brother of the narrator.

The brother is insulted by a group of racist white men. One throws a pool ball at him but misses, breaking a mirror. Though he is handy with his fists, the brother knows fighting isn't an option, and he runs home.

Nonetheless, that night, deputies come to his house to arrest him. The sheriff tells his mother: "Your boy can't be fighting white boys in this parish. If he wants to fight with white boys, then, by God, he's gotta go up North."

His mother, defiant, refuses to turn over her son. "He's gotta go up North to keep somebody from whipping his ass?" she asks rhetorically. "He ain't going nowhere."

* * *
From Frederic Bourke's trial. Here's the lead from David Glovin's account of the jaw-dropping testimony on day three: Viktor Kozeny’s security chief told a jury how the Czech expatriate brought ex-Senator George Mitchell into a deal to buy Azerbaijan’s oil company, spent $96,000 on a dinner for six, and befriended powerful American investors. There's lots more here.

Read all our posts about U.S. v. Kozeny and the prosecution of Frederic Bourke here.

* * *
aimeebarnes.com New York-based writer and business strategist Aimee Barnes keeps an eye on China-related developments in her blog. She asked us about corruption and compliance and has now posted the results. Thanks, Aimee.
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Thursday
Feb192009

The Friday Report

Former Congressman William J. Jefferson says the cash found in his freezer four years ago proves he didn't violate the Foreign Corrupt Practices Act. Yesterday Jefferson filed a petition for certiorari to the Supreme Court, asking for review of the Fourth Circuit's refusal to dismiss most of the corruption-related charges against him. But he's not asking for dismissal of the two Foreign Corrupt Practices Act counts.

Jefferson's case is best known for allegations that in August 2005, he hid $90,000 in the freezer at his Washington home. The New Orleans Times-Picayune reports here that Jefferson's lawyers say the cash in the freezer is not alleged to be a bribe to Jefferson, but rather evidence of a violation of the Foreign Corrupt Practices Act. In an apparent preview of his FCPA defense, his lawyers said the money "was transmitted to Mr. Jefferson by the government's cooperating witness during the course of the FBI's sting operation so that he would pass it to a foreign government official," the then vice president of Nigeria. "But Mr. Jefferson did not do that. Instead, the marked funds were recovered in his home."

Jefferson says that except for the two FCPA charges, the grand jury's 16-count indictment depended on materials protected by the absolute privilege in the Constitution’s Speech or Debate Clause (Article I, Section 6, Clause 1). The evidence concerning the cash in the freezer, he acknowledges, wasn't protected by the privilege. A federal grand jury indicted him in June 2007 for violating the antibribery provisions of the Foreign Corrupt Practices Act, and also for soliciting and accepting bribes, wire fraud, money laundering and obstruction of justice. He faces a maximum of 235 years in prison if convicted on all counts. His trial is scheduled to start on May 26. Last year he lost an election for a 10th term in Congress from Louisiana.

The always-excellent scotusblog has a full report. It also has links to the Supreme Court petition in Jefferson v. U.S. here and the Fourth Circuit Court's decision from November 2008 rejecting Jefferson’s motion to dismiss here.

* * *

The murder of Russian journalist Anna Politkovskaya in 2006 that we talked about earlier this week (here) remains officially unsolved. Yesterday a jury in Moscow acquitted three men charged in her shooting. The LA Times has the story here. On trial were two Chechen brothers and a former Russian police officer. Another man accused in the murder and being tried separately was also released. He's a member of Russia's FSB, the domestic successor of the KBG.

The LA Times said of the verdict, "Critics say it was no accident that the search for the killers was ultimately fruitless. Even Moskalenko, the lawyer representing the Politkovskaya family, stopped just short of urging jurors to acquit the suspects, throwing blame instead on corrupt authorities."

Another journalist from Politkovskaya's paper, the Novaya Gazeta, was shot and killed in Moscow last month. The Washington Times says four journalists from Novaya Gazeta have been killed in the past eight years. "Since 2000," it says, "16 journalists have died in Russia under suspicious circumstances -- and scores of others have been threatened, intimidated and assaulted."

* * *

Russia dropped to 147th on the 2008 Corruption Perception Index, tied with Bangladesh, Kenya and Syria. On the 2009 Index of Economic Freedom, it ranks 146th. "Corruption remains all-encompassing," according to the Heritage Foundation report, "both in the number of instances and in the size of bribes sought. Manifestations include misuse of budgetary resources, theft of government property, kickbacks in the procurement process, extortion, and official collusion in criminal acts. Customs officials are extremely inconsistent in their application of the law."

In the World Bank's 2009 Doing Business project, Russia ranks near the bottom -- 120th, down eight places from last year. The amount of red tape choking the system is astounding. Building a warehouse in Russia requires 54 procedures and takes an average of 704 days. The OECD-wide averages, by comparison, are about 15 procedures and 161 days.
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Wednesday
Jan282009

The Hunt For Overseas Evidence

No corporations and just a few individuals have fought Foreign Corrupt Practices Act charges in court, so only a handful of people have ever seen an FCPA defense up close. But for the first time, we have a chance to follow not one but three pending prosecutions -- in U.S.v. Kozeny (defendant Frederic Bourke, Jr., owner of the luxury handbag brand Dooney & Bourke), U.S. v. Green (husband-and-wife movie producers Gerald and Patricia), and U.S. v. Jefferson (former Rep. William J. Jefferson).

Because alleged FCPA violations usually involve some overseas behavior, prosecution and defense evidence has to be retrieved from beyond U.S. borders. There's no way to compel production from a foreign entity or individual outside the United States. So prosecutors usually work directly with foreign law enforcement agencies to exchange information on a voluntary basis; defendants don't have that option. Their route to foreign evidence is through letters rogatory. In United States usage, according to 22 CFR 92.54, "letters rogatory have been commonly utilized only for the purpose of obtaining [overseas] evidence. Requests rest entirely upon the comity of courts toward each other, and customarily embody a promise of reciprocity."

Mr. Bourke says for his defense he needs stock ownership and transfer records about a Liechtenstein corporation. In his case docket, item 135 is an order directing issuance of a letter rogatory. Attached to the order is the letter rogatory itself, formally called a "Request for International Judicial Assistance (Letter Rogatory) to the appropriate judicial authority of the Principality of Liechtenstein."

Again, a letter rogatory can't compel a foreign individual or entity outside the U.S. to produce evidence; it's only a polite request to a foreign court on behalf of one of the parties, in this case Mr. Bourke. We imagine the normally secretive authorities in Liechtenstein won't be anxious to release corporate ownership information. What happens if Mr. Bourke never sees the company records he's after? Can he describe the "missing" evidence to the jury? Can he argue that his right to a fair trial is somehow violated? We'll keep watching.

For practical advice about how to prepare, obtain and use letters rogatory, the State Department runs an excellent resource site here.

Download the trial court's docket (as reported by Pacer) in U.S. v. Kozeny et al here.

Download the Order Directing Issuance of Letter Rogatory on behalf of Frederic Bourke, Jr., with a copy of the letter rogatory attached (entered October 17, 2008) here.
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Thursday
Dec252008

Help Wanted For Siemens Report

One of ProPublica's outstanding investigative reporters, T. Christian Miller, wrote the story below (which ProPublica co-published with MSN Money). We reprint it under ProPublica's generous license ("You can republish our articles for free, if you credit us, link to us, and don't edit our material or sell it separately.")

If you have trouble accessing the DOJ and SEC charging documents linked in the story (we did), you can also find them at the bottom of our earlier post here.

_________

Help Us Name Names in Siemens Corruption Scandal

by T. Christian Miller, ProPublica - December 22, 2008 1:05 pm EST

Get ready for the Siemens World Corruption Tour, 2001-2008. Siemens pleaded guilty last week to corruption across the globe, receiving a record-setting fine -- $1.6 billion (which sounds like a lot, but really, it's just 0.3 percent of their revenue during those years.)

In announcing the fine, the Justice Department and the Securities and Exchange Commission released formal complaints detailing how Siemens bribed government officials all around the world. (We published a story in Sunday's New York Times profiling the Siemens accountant at the center of the scandal.)

However -- and this is a big "however" if you're into accountability -- they released none of the names of the corrupt bureaucrats that took the cash or the Siemens officials who paid it.

This was done, Justice folks said, to protect the integrity of ongoing investigations and to comply with privacy laws in various countries.

At the hearing prosecutors seemed a bit wistful that they couldn't reveal the names, which were provided to Judge Richard Leon in a sealed file. Lori Weinstein, the dogged prosecutor who pursued the case, said the department could not provide exact names. But, she said, the documents were sprinkled with clues to provide "sufficient clarity" for the court to figure out who was who.

Some identifications are vague -- there are plenty of "government officials." But others are more specific. (Hello, "Wife of the former Nigerian Vice President, a dual U.S.-Nigerian citizen.") ProPublica figures that with the help of readers, we might be able to ID at least some of these folks. Below, you'll find descriptions of the bribees. Send us a name and a link sourcing the information.

To get things started, take the case of the Argentine identity card contract. The SEC's complaint said that Siemens paid bribes to a certain "president of Argentina" who left office in 1999. Not too hard to figure out that one -- Carlos Menem ran the country from 1989 to 1999. Looks like the buck really did stop there.

This is by no means an exhaustive list. As of last count, 16 countries had investigations ongoing into Siemens. Our list below includes only those bribery schemes detailed in the formal complaints by the Justice Department and the Securities and Exchange Commission.

E-mail us if you find clues to figure out the other grafters.

Argentina
Source: SEC Complaint, p. 21
National Identity Card contract (1998-2004)
Contract Amount: $1 billion
Bribe Amount: $40 million
Recipients:

  • President of Argentina until 1999 (Carlos Menem)
  • Minister of the Interior
  • Head of Immigration Control
  • Cabinet ministers

Bangladesh
Source: SEC Complaint, p. 19
Mobile Phone contract (2004-2006)
Contract Amount: $40.9 million
Bribe Amount: $5.3 million
Recipients:

  • Son of then-Prime Minister
  • Minister of Posts & Telecommunications
  • Director of Procurement for the Bangladesh Telegraph & Telephone Board
  • In addition, Siemens Ltd. Bangladesh hired relatives of two BTTB and Ministry of Posts and Telecom officials.

Venezuela
Source: SEC Complaint, p. 14
Metro contracts (2001-2007)
Valencia and Maracaibo metro systems
Contract Amounts: $642 million
Bribe Amount: $16.7 million
Recipients:

  • A high-ranking member of the central Venezuela government
  • Two prominent Venezuelan attorneys acting on behalf of government officials
  • A former Venezuelan defense minister and diplomat

Israel
Source: SEC Complaint, p. 17
Power plants (2002-2005)
Contract Amount: $786 million
Bribe Amount: $20 million
Recipients:

  • Former director of the Israel Electric Company
  • Payments routed through brother-in-law of former CEO of Siemens Israel Ltd.

Nigeria
Source: SEC Complaint, p. 20
Telecommunications projects (2000-2001)
Contract Amount: $130 million
Bribe Amount: At least $4.5 million
Recipients:

  • Wife of the former Nigerian Vice President, a dual U.S.-Nigerian citizen who lived in the U.S.
  • "likely" the former President of Nigeria
  • "likely" the former Vice President of Nigeria

Vietnam
Source: SEC Complaint, p. 22
Hospital equipment sales (2005-2006)
Contract Amount: $6 million
Bribe Amount: $383,000
Recipients:

  • Government officials

Source: SEC Complaint, p. 27
Mobile network (2002)
Contract Amount: $35 million
Bribe Amount: $140,000
Note: Siemens did not win the project but agreed to pay 8 percent to 14 percent of project value to Vietnamese government officials
Recipients:

  • "likely" Vietnamese Ministry of Defense officials
  • Vietel, state-owned mobile phone network

China
Source: SEC Complaint, p.16
Metro trains and signaling devices contracts (2002-2007)
Contract Amount: $1 billion
Bribe Amount: $22 million
Recipients:

  • Government officials

Source: SEC Complaint, p. 18
High voltage lines (2002-2003)
Contract Amount: $838 million
Bribe Amount: $25 million
Recipients:

  • Government officials

Source: SEC Complaint, p. 23
Medical equipment sales (2003-2007)
Contract Amount: $295 million
Bribe Amount: $14.4 million
Recipients:

  • Deputy Director, Songyuan City Central Hospital, convicted in China and sentenced to 14 years in prison

Source: SEC Complaint, p.24
Hospital equipment sales (1998-2004)
Contract Amount: Unknown
Bribe Amount: $650,000
Recipients:

  • Chinese hospital officials

Russia
Source: SEC Complaint, p. 25
Traffic control system (2004-2006)
Contract Amount: $27 million
Bribe Amount: $741,419
Recipients:

  • Government officials

Source: SEC Complaint, p. 27
Hospital equipment (2000-2007)
Contract Amount: Unknown
Bribe Amount: $55 million
Recipients:

  • Russian state-owned hospital officials

Mexico
Source: SEC Complaint, p. 26
Refinery modernization (2004)
Contract Amount: Unknown
Bribe Amount: $2.6 million
Recipients:

  • Senior official of Pemex, state-owned oil company

Iraq
Source: SEC Complaint, p. 28
Oil for Food program (2000-2003)
Contract Amount: $124 million
Bribe Amount: $1.7 million
Recipients:

  • Iraqi Ministry of Electricity officials
  • Iraqi Ministry of Oil official
So who are these folks? Send us a name and a link sourcing the information.
_________

Will readers of the FCPA Blog contribute to this story? Let's see.

* * *
A Siemens / Jefferson Link? Meanwhile, a story in the Dec. 24 edition of Harper's Magazine by Ken Silverstein refers to the earlier joint ProPublica/New York Times story about Siemens, and then says: "Now ProPublica has asked for help identifying some of the alleged recipients of the bribes who are described but not named in the SEC complaint. One of those people appears to be Jennifer Atiku-Abubakar, who is tied to the scandal involving the former Louisiana congressman William Jefferson and is also a donor to the Republican Party. But I want to emphasize that I have no way of knowing whether the charges made in the complaint about her are accurate. . . . According to this Washington Post story, she is the wife of Atiku Abubakar, the very controversial former vice president of Nigeria from 1999 to 2007."
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Thursday
Dec112008

The Friday Blotter

U.S. Rep. William Jefferson (D-La.) lost an election for his Congressional seat on Saturday to Republican Anh "Joseph" Cao, who will become the first Vietnamese-American in Congress. Rep. Jefferson, 61, was indicted in June last year by a federal grand jury for violating the antibribery provisions of the Foreign Corrupt Practices Act. He's also charged with soliciting and accepting bribes, wire fraud, money laundering and obstruction of justice. He faces a maximum of 235 years in prison if convicted on all 16 counts. His trial in Alexandria, Virginia is scheduled to start early next year.

* * *
Another politician in serious trouble for alleged corruption is Illinois Governor Rod R. Blagojevich. He was arrested Tuesday on federal charges for trying to sell President-elect Barack Obama's senate seat.

* * *
So which state is more corrupt -- Louisiana or Illinois? According to the Corporate Crime Reporter's 2007 survey, it's Louisiana. Illinois ranked 6th worst but may move higher if Gov. Blagojevich is convicted. The ten most corrupt states, by the way, are Louisiana (1), Mississippi (2), Kentucky (3), Alabama (4) Ohio (5) Illinois (6), Pennsylvania (7), Florida (8), New Jersey (9) and New York (10). The survey covered the 35 most populous states, so the fifteen states with under two million people weren't included. The least corrupt states in the survey were Utah (31), Kansas (32), Minnesota (33), Iowa (34) and Oregon (35).

* * *
Strange arbitrage? According to Border's in-store book locator, Bribery Abroad is out of print. Not true. It's available from Amazon here for under $20 and can be downloaded here for about half that. Strangely, the Border's computer system offered a used copy at $69.26. The blurb said its condition is "Fine -- Carefully handled. Has no marks or blemishes on text, binding, or dust jacket. Almost new, but lacking new book crispness." Our advice: Buy new and save a bundle.

* * *
Dependable sources told us earlier this week to expect some blockbuster FCPA enforcement news. And stories out today say Siemens is close to settling with the SEC. The Associated Press quotes a Siemens supervisory board member as saying, "We're hoping on an agreement with the SEC before Christmas. If necessary, we'll meet December 23rd."

But Siemens also had some bad news this week. European Union antitrust regulators charged it with forming a price-fixing cartel among makers of power transformers. A separate AP report said Siemens, France's Areva and Swiss engineering group ABB confirmed they had received the EU charges. Public and private corruption sometimes accompany cartel activity, as illustrated by recent cases involving the makers of marine hose and orthopedic devices.

* * *
We'll be wheels up for a few days. Enjoy the weekend.

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Thursday
Nov132008

Congressman's FCPA Trial Draws Near

Rep. William J. Jefferson (D-La.) moved closer this week to becoming the first member of the United States House of Representatives to be tried for violating the Foreign Corrupt Practices Act. A unanimous three-judge panel of the Fourth Circuit Court of Appeals on Wednesday tossed out Rep. Jefferson's claims that evidence heard by a federal grand jury violated the constitution's speech or debate clause. The appeals panel agreed with U.S. District Judge T.S. (Tim) Ellis III, who said Jefferson's arguments would expand legislative immunity so much that prosecuting a congressman for a crime would become virtually impossible.

The constitution's speech or debate clause (Article I, Section 6, Clause 1) creates a limited privilege for information relating to work by legislators. It prohibits their arrest during attendance at the Congress, "and in going to and from the same, and for any Speech or Debate in either House, they shall not be questioned in any other Place." Rep. Jefferson had argued that testimony by his former staff members to the grand jury was based on his work in Congress and therefore protected. The Fourth Circuit panel, however, said references to legislative action in the testimony were incidental and not central to the indictment against him. A copy of the Fourth Circuit's opinion is available here (thanks to Greg Morin for sending it to us).

Rep. Jefferson can now ask the Fourth Circuit to hear an appeal en banc, and he can seek review by the Supreme Court. His trial was scheduled to begin in December but has been delayed. He was indicted in June last year by a federal grand jury for violating the antibribery provisions of the Foreign Corrupt Practices Act. He's also charged with soliciting and accepting bribes, wire fraud, money laundering and obstruction of justice. He faces a maximum of 235 years in prison if convicted on all 16 counts.

Rep. Jefferson, 61, has held his seat since 1991 in Louisiana's 2nd District, which includes much of New Orleans. Despite being indicted last year, he won this year's primary runoff and is favored to win re-election on Dec. 6.

Prosecutors allege that in August 2005, Rep. Jefferson hid $90,000 in the freezer at his Washington home. It was part of $100,000 provided by the government's cooperating witness and intended to be used to bribe a Nigerian official. "The cash was separated into $10,000 increments, wrapped in aluminum foil, and concealed inside various frozen food containers," according to prosecutors. The purpose of the alleged bribe was to induce the Nigerian official to steer business from Nigeria's dominant government-controlled telecommunications company to firms in which Rep. Jefferson's family members had interests.

His alleged co-conspirators were Vernon L. Jackson, a Louisville, Ky., businessman, and Brett M. Pfeffer, a former Jefferson congressional staff member. Jackson was sentenced to 87 months in prison after pleading guilty to conspiracy to commit bribery and paying bribes to a public official. Pfeffer was sentenced to 96 months in prison after pleading guilty to conspiracy to commit bribery and aiding and abetting the solicitation of bribes by a member of Congress.

Before being indicted, Rep. Jefferson had compiled an outstanding record. He was the first African-American elected to Congress from Louisiana since Reconstruction. He graduated from Southern University A&M College and Harvard Law School, and he also holds an LLM in tax from Georgetown. As a state senator, he was twice named Legislator of the Year by the Alliance for Good Government.

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Monday
Nov102008

The FCPA Goes To Court

For such a high-profile federal law, the Foreign Corrupt Practices Act doesn't make it to court much. In fact, most years go by without a single trial involving the FCPA. That's because typical defendants would rather cut a deal with prosecutors instead of risking a guilty verdict that might carry a five-year jail term. By some strange coincidence, however, there could soon be as many as three FCPA trials all happening at once. Not long ago, we'd have put the odds of seeing that at zero (which is why we don't gamble). The trials might not happen, but as of today there's a chance, at least, that some or all of them will go forward. Here's the situation:

U.S. v. Kozeny, Southern District of New York (Manhattan). The defendant is Frederic Bourke, 62, owner of the luxury handbag brand Dooney & Bourke. He was indicted in May 2005 with Victor Kozeny and David Pinkerton over an alleged plot to bribe officials from Azerbaijan. Kozeny is in the Bahamas fighting extradition and Pinkerton has been dismissed from the case, leaving Bourke to fight the FCPA charges on his own. He and the federal prosecutors are gearing up for trial. Last month Judge Shira A. Scheindlin issued an opinion and order refusing Bourke's request for a jury instruction on the FCPA's local law affirmative defense.

U.S. v. Green, Central District of California (Los Angeles). The defendants are Hollywood movie producers Gerald Green, 75, and his wife Patricia Green, 52. They were arrested in December 2007. They're accused of paying more than $1.8 million in bribes to a former governor of the Tourism Authority of Thailand in return for contracts worth more than $14 million. A superseding indictment last month added allegations that Mrs. Green filed two false tax returns in 2005 and 2006 that included deductions for "commissions" which she knew were "bribes to a foreign official for obtaining and retaining business." Their trial was first scheduled to begin in early 2008 and has been postponed a couple of times.

U.S. v. Jefferson, Eastern District of Virginia (Alexandria). The defendant is Rep. William Jefferson, 61, (D-La.), a Congressman since 1991 from a district that includes New Orleans. He was indicted in June 2007 by a federal grand jury for violating the anti-bribery provisions of the Foreign Corrupt Practices Act. He was also charged with soliciting and accepting bribes, wire fraud, money laundering and obstruction of justice. Prosecutors allege that in August 2005, Rep. Jefferson hid $90,000 in the freezer at his Washington home. It was part of $100,000 provided by the government's cooperating witness and intended to be used to bribe a Nigerian official. Rep. Jefferson had been scheduled to go on trial next month, but that's not likely to happen. He has asked the U.S. 4th Circuit Court of Appeals in Richmond, Va. to dismiss all charges except for one count of violating the FCPA and another of obstruction of justice. Last Tuesday, Rep. Jefferson won a primary runoff election in his district and is favored to win re-election on Dec. 6, according to CG Politics.

We'd like to report news from the trials if and when they begin. To do that, though, we'll need help. If anyone is willing and able to send us dispatches from time to time from the courtrooms (including news about the prelims now taking place), please drop us a note here. We can post reports with or without attribution, and we'll also take responsibility for editing. So news can be sent in raw form, of any length and frequency.

We could close now with something from a recruiting poster, like: Don't just read about FCPA history, be a part of it. Drop us a line today. And you know, that actually sounds pretty good. So consider it said.

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