Crime in the Suites: An Analyis of Current Issues in White Collar Defense
Posts Tagged ‘Bribery’
Feb 20
2013

Does ‘Speech or Debate’ Trump the Right to Defend Oneself in Court?

On February 5, 2013, the Bipartisan Legal Advisory Group of the U.S. House of Representatives filed a brief urging the U.S. Court of Appeals for the D.C. Circuit to hold that U.S. legislators and their aides cannot be forced to testify about their legislative activities, even when their expected testimony might help exonerate a criminal defendant.

The case raises interesting questions about the balancing of constitutional imperatives – here, the separation of powers and a criminal defendant’s right to present a defense. Fraser Verrusio, a former House staffer, is hoping for a balance struck in favor of defendants’ rights.

In 2011, Verrusio was convicted of accepting an illegal gratuity in connection with his duties as then policy director of the House Transportation Committee. According to the prosecution, Verrusio accepted and failed to report an all-expenses-paid trip to New York City that included a ticket to the World Series and an outing to a strip club. The trip was funded by United Rentals, a construction-equipment company that had stepped up its lobbying efforts to get favorable amendments into the federal highway bill. United Rentals wooed senior staff member Verrusio, who reportedly advised the chair of the House Transportation Committee (as well as the committee) on legislative strategies and policy. Prosecutors alleged that when Verrusio accepted the $1,200 trip, he knew that United Rentals was compensating him for future assistance on the highway bill.

One key piece of evidence against Verrusio was an e-mail that United Rentals lobbyist James Hirni sent to Vivian Curry, legislative director for then-House Committee member John Boozman. In his e-mail, Hirni said, “I have spoken to [Verrusio] and he is good to go. I am resending him the language in the Senate bill, with changes which would represent the 100 percent victory for [United Rentals. Verrusio] asked us to give him the language plus what we would want in the perfect world.”

To address the possible inferences from that e-mail, Verrusio’s attorneys issued a trial subpoena to Curry. The defense expected her to testify that Verrusio had not inserted himself into the legislative process and had not pressured her. But Curry moved to quash the subpoena on grounds that her testimony was privileged under the Speech or Debate Clause of the Constitution. She argued that the testimony sought was protected because it concerned “information gathering for legislative purposes.”

Verrusio countered that the inability to call Curry would violate his rights to due process and to present a complete defense. During the hearing on Curry’s motion, the defense made a potentially critical error when it acknowledged the “high hurdle” imposed by the Speech or Debate Clause and then conceded that the clause “in fact did “appear to cover [the e-mail] communications.” The court held that Curry had properly invoked the privilege and could not be forced to testify.

After the jury returned a guilty verdict on all counts, Verrusio appealed. Among other things, he claims that the trial court erred when it prevented him from calling Curry as a witness. In his view, one of two results must follow. First, Verrusio contends that protections under the Speech or Debate Clause are not absolute but, in some cases, must give way to a defendant’s right to compulsory process. He argues that trial judges should balance a defendant’s need for otherwise-protected testimony against the potential burden on Congress. When the case involves an aide’s testimony regarding informal, passive information gathering from a third party, the potential burden is minimal to non-existent. In such cases, the next question to ask is whether the testimony sought is material. In cases like his — where the jury verdict is already of questionable validity — the “materiality” bar is lower. Thus, he argues, any evidence calling into question the government’s theory could have created reasonable doubt.

Verrusio contends in the alternative that, if the Speech or Debate Clause privilege is absolute, the indictment must be dismissed.

The prosecution replies that Verrusio waived his right to appeal the trial judge’s order to quash. Not only did the defense concede that Curry’s testimony was protected; it first introduced the “balancing test” argument on appeal. Therefore the appellate court may not consider it.

Speaking as friends of the court, the House’s Bipartisan Legal Advisory Group framed the issue as one upon which “the whole American fabric” rests – separation of powers. The decision is simply whether an individual’s right to evidence trumps American liberty in general – an impossible bar to meet. After summarizing the history of the Speech or Debate Clause, the House brief argues that the clause is absolute, regardless of whether the proceedings are civil or criminal. Moreover, the testimony Verrusio sought from Curry was unquestionably protected because it concerned “activities that were ‘an integral part of the deliberative and communicative processes by which Members participate in committee and House proceedings.’” According to the House brief, no court has held that the Speech or Debate Clause privilege is subject to a balancing test. And Verrusio’s reliance on cases recognizing some flexibility with respect to executive privilege is unavailing since executive privilege is not expressly mandated in the Constitution.

But the House brief glosses over the fact that executive privilege is rooted in separation of powers just like the speech or debate privilege. That leaves the question of why the separation of powers in executive-privilege cases need not be guarded so jealously.

Courts decline to address thorny constitutional questions if they can resolve a case on other grounds. It seems likely that the D.C. Circuit will home in on Verrusio’s alleged failure to preserve his argument and save the speech or debate issue for another day. Verrusio’s reply brief is due to be filed by March 13, 2013; the D.C. Circuit will likely issue its decision sometime mid-year.

Nov 26
2012

New DOJ Guide on FCPA Provides Guidance, Gives Statute a Broad Reading

After much uncertainty and discussion, the U.S. Department of Justice has finally issued official guidance regarding who qualifies as a “foreign official” under the Foreign Corrupt Practices Act (FCPA). This guidance was published on November 14, 2012, in the Resource Guide to the U.S. Foreign Corrupt Practices Act, a broad guide to enforcement and interpretation of the FCPA that the DOJ issued jointly with the Securities and Exchange Commission.

As expected based on the DOJ’s previous interpretations of the term, the Guide provides a broad definition of “foreign official” by stating that the term encompasses “officers or employees of a department, agency, or instrumentality of a foreign government.” This definition imposes few restrictions on whom the Department will consider a “foreign official” and stretches the term far beyond its obvious and limited meaning.

Much of the confusion regarding “foreign official” status arose from government-affiliated entities that fall in the hazy middle ground between government agencies and private entities. Often this uncertainty surrounds services such as telecommunications, banking, and the aerospace industry, in which a government has some degree of ownership in the entity but may not completely own or control it. In those cases, the Guide clarifies that although the DOJ uses a multifactor test to determine whether an entity is a government instrumentality, it is most likely to pursue cases in which a government has a majority ownership stake. However, it acknowledged that there may be rare cases in which a government that owns only a minority stake nevertheless controls the entity through veto power, political appointees, or other means, in which case it will still be considered a government instrumentality.

Even though the very term “official” denotes a certain degree of authority within an organization, the Guide makes clear that the FCPA “covers cor¬rupt payments to low-ranking employees and high-level officials alike” in government departments, agencies, or instrumentalities. Therefore, corrupt payments to anyone within these organizations will bring the case within the FCPA’s bounds, regardless of their status within the organization or their ability to control or influence the instrumentality.

Although the new Guide states that its advice is “non-binding, informal, and summary in nature,” it is the best indication of how the DOJ plans to implement and enforce the FCPA. So while the content of the Guide essentially affirms the stance that the DOJ has assumed in existing cases, it does provide a foundation of guidance for organizations to rely on in their contacts with foreign entities. Unfortunately, this guidance will largely serve to dissuade companies from creating beneficial partnerships for fear that they might accidentally implicate FCPA concerns. As we have discussed previously on this blog, we hope that the courts will weigh in on this issue and find a more reasonable interpretation of what constitutes a “foreign official.”

Oct 17
2012

DOJ Opinion on Key FCPA Issue Makes Sense, But What’s Next?

We have previously advocated for the Department of Justice to employ a more narrow reading of the term “foreign official” in the Foreign Corrupt Practices Act. Therefore, we were pleased to see that the DOJ recently issued an opinion that parsed the definition and came to the conclusion that a member of a foreign royal family was not a “foreign official” under the FCPA. Although this is a positive development, it somewhat conflicts with the DOJ’s prior opinions and accordingly will probably serve to further muddy the FCPA waters.

In February 2012, an American lobbying firm approached the DOJ to request an opinion regarding the FCPA implications of its proposed partnership with a foreign consulting group. The consulting group was to act as its sponsor in providing lobbying services for the unspecified foreign country’s embassy in the U.S. The lobbying firm was concerned that this arrangement might implicate the FCPA because the foreign consulting group was owned, in part, by a member of the foreign royal family.

On September 18, the DOJ issued a statement finding that the royal family member was not considered a “foreign official” under the FCPA. The DOJ stated that, “[W]hether a member of a royal family is a ‘foreign official’ turns on such factors as (i) how much control or influence the individual has over the levers of governmental power, execution, administration, finances, and the like; (ii) whether a foreign government characterizes an individual or entity as having governmental power; and (iii) whether and under what circumstances an individual (or entity) may act on behalf of, or bind, a government.”

As the DOJ explained, in this instance the “Royal Family Member holds no title or position in the government, has no governmental duties or responsibilities, is a member of the royal family through custom and tradition rather than blood relation, and has no privileges or benefits because of his status.” The DOJ concluded that, “the Royal Family Member does not qualify as a foreign official under [the FCPA] so long as the Royal Family Member does not directly or indirectly represent that he is acting on behalf of the royal family or in his capacity as a member of the royal family.”

The DOJ surprised us by undertaking a reasonable, thoughtful, and fact-intensive analysis in finding that the royal family member was not a foreign official. However, the new standard invoked by the DOJ conflicts with the broad reading of “foreign official” that the DOJ has previously applied, which encompasses even employees of state-owned communications companies. Surely a telecom employee does not exert much control or influence “over the levers of governmental power,” nor would his government characterize him as having “governmental power.” Yet the DOJ found telecom employees to be foreign officials.

We applaud the DOJ for taking a reasonable approach in determining whether the royal family member is a “foreign official.” We encourage the DOJ to apply the same three factors every time it analyzes who is, and is not, a foreign official.

 

 

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Sep 14
2012

Eleventh Circuit Case Will Test DOJ’s Broad Reading of FCPA

The Foreign Corrupt Practices Act (FCPA) prohibits the bribing of foreign officials. While that may seem like a straightforward concept, previous posts on this blog have shown that the precise definition of who constitutes a “foreign official” has long been the subject of much uncertainty, debate, and litigation.

The FCPA defines a “foreign official” as an “officer or employee of a foreign government or any department, agency, or instrumentality thereof.” The Department of Justice takes a broad view of this definition, consistently using the FCPA to prosecute individuals who allegedly bribed employees of state-owned companies that act merely as commercial entities, such as utility companies, rather than those that act as a sovereign.

For the first time, a U.S. court of appeals is considering a case that tests this question. An appeal in the Terra Telecommunications case, previously discussed in a post on this blog, is currently pending before the U.S. Court of Appeals for the 11th Circuit. The defendants in that that case, Joel Esquenazi and Carlos Rodriguez, are former executives at Terra Telecommunications. They were convicted of bribing officials at the state-owned telecommunications company Haiti Teleco.

Prosecutors successfully persuaded the trial court that Haiti Teleco was an “instrumentality” of the Haitian government, thereby making its employees “foreign officials.” However, on appeal the defendants are asking the court to find the word “instrumentality” in the FCPA unconstitutionally vague and ambiguous. The Justice Department filed a brief on August 21, 2012, arguing for a broad reading of the term “foreign official.”

The defendants’ argument is not novel. For years, businesses and legal groups have been seeking guidance on the definitions of “foreign official” and “instrumentality” under the FCPA. In February, a coalition of businesses and organizations sent a letter to the DOJ seeking clarification of those terms. The letter highlighted the concerns that without proper guidance, businesses suffer uncertainty and risk when trying to comply with the FCPA because the authorities take a “highly fact-dependent and discretionary approach” in interpreting the terms.

Despite the DOJ’s long-standing position that the FCPA is not vague, it has announced that it will release new guidance this year on the act’s criminal and civil enforcement provisions. While the guidelines will provide clarification and guidance to businesses, they will almost surely perpetuate the DOJ’s absurd position that it can pursue employees of commercial entities merely because the companies are state-owned. This is clearly not what Congress intended in enacting the FCPA. Last year, FCPA expert Michael Koehler pointed out that the DOJ’s legal interpretation of “foreign official” is “the functional and substantive equivalent of the DOJ alleging that General Motors Co. or American International Group Inc. is an ‘instrumentality’ of the U.S. government (given its ownership interests in these companies) and that all GM and AIG employees are therefore U.S. ‘officials.’ ”

We hope that the appeals court will accept these arguments and will find that this case does not implicate the issues that the FCPA was designed to address. The courts need to keep the DOJ in check and prevent it from abusing its authority by prosecuting individuals under statutes that Congress did not intend to apply to them.

Apr 24
2012

Worst Part of Wal-Mart Bribery Case Is Failure to Conduct Proper Investigation

Over the weekend, The New York Times broke a major story, publishing a highly detailed 8,000-word article that seems to indicate that Wal-Mart not only engaged in a pattern of bribery of Mexican government officials in the mid-2000s but also that the company intentionally stifled an internal investigation of the alleged bribery and in fact directed most of its furor against the former employee who blew the whistle on Wal-Mart’s conduct.

The story knocked 5 percent off Wal-Mart’s stock price after it broke, and commentators are talking about possible jail terms for company executives and major fines under the Foreign Corrupt Practices Act (FCPA). Democrats on the Hill are already talking about hauling top Wal-Mart executives to hearings to explain the alleged bribery and cover-up.

We certainly don’t condone unethical or illegal practices, and we have always taken the view that the best way for a company to deal with a bribery scandal is to open a no-holds-barred internal investigation. According to the Times, Wal-Mart originally decided to do just that by hiring the law firm of Willkie, Farr & Gallagher to conduct that type of internal probe, but it instead chose to do a much more limited investigation in which its senior management had direct control over the probe.

From a legal, prudential, and public relations standpoint, Wal-Mart should have stayed with its original plan of bringing in Willkie Farr. A report from a law firm of that firm’s stature, acting independently, would have had instant credibility and would have more readily helped Wal-Mart get past this crisis.

One thing that an internal investigation might have found is that many of the payments by Wal-Mart to foreign officials did not violate the FCPA since they merely facilitated government action, such as the granting of a permit, that would have occurred in any case. We simply don’t know about the nature of each alleged payment – but now, with Congress, the media, and the blogosphere on Wal-Mart’s trail, all we will hear for a while will be how guilty Wal-Mart is.

Regardless of the ultimate outcome, this should remind everyone that the rules for doing business abroad are not the same as in the United States. Sometimes, compliance with U.S. law such as the FCPA is not uppermost in the mind of executives in foreign countries, and it should be.

Mar 01
2012

Dismissal of FCPA Cases Represents Cautionary Tale for DOJ

A dramatic, headline-grabbing white-collar crime sting in January 2010 involved the arrest of 22 executives and employees of companies in the military and law enforcement products industry – and ultimately led only to a series of acquittals and mistrials, causing many to wonder whether the case should have been brought at all. After two trials for a total of 10 defendants that failed to result in any convictions, the U.S. Department of Justice dropped its case against all remaining defendants last month.

The Foreign Corrupt Practices Act prohibits people in the United States from bribing foreign officials for the purposes of obtaining or retaining business. The DOJ press release announcing the sting said that it was the single largest investigation and prosecution against individuals in the 32-year history of the DOJ’s enforcement of the FCPA. The defendants were charged with violating the Act for allegedly agreeing to pay kickbacks to a Gabon minister of defense in exchange for contracts to supply the country’s presidential guard. The deal, however, was a ruse, with FBI agents posing as Gabonese defense officials.

When the DOJ announced the arrests, Assistant Attorney General Lanny A. Breuer promoted these undercover actions as “a turning point,” saying that the indictments “reflect the Department’s commitment to aggressively investigate and prosecute those who try to advance their businesses through foreign bribery.”

While three defendants pleaded guilty immediately, the remaining 19 were to be tried in four separate trials in federal court in Washington, D.C. In the end, the DOJ’s aggressive tactics did not impress the judge or jury.

In the first trial in the summer of 2011, four defendants received a mistrial due to a hung jury. In the second trial of six defendants, defense lawyers argued that the DOJ and the FBI led their clients to believe what they were doing was lawful and disregarded their own DOJ guidance on sting operations. U.S. District Judge Richard Leon dismissed conspiracy charges against the defendants, which ended the case for one defendant, who was only charged with conspiracy.

For the remaining defendants, only the substantive FCPA violation charges were left for the jury’s consideration. In January 2012, jurors acquitted two defendants before becoming deadlocked on the remaining three, resulting in another mistrial. Recognizing that further prosecution would likely be futile, on February 21, 2012, the DOJ requested that the court dismiss the pending charges against all remaining defendants, and stated that it would not seek to retry the defendants who received mistrials.

In dismissing the case, Judge Leon voiced concern regarding the government’s “very aggressive conspiracy theory.” While the judge ultimately applauded the DOJ for “the wisdom, the courage, the conviction to face up to the limitations of this case,” we do not believe that the DOJ should be praised for dropping the remaining cases only after unsuccessfully trying two cases using evidence derived from dubious investigative techniques. We hope that the DOJ will see this entire costly venture as a cautionary tale and will proceed in future cases with justice, rather than headlines, in mind.

Jun 24
2011

9th Circuit to D.C. Circuit: We’ll see you in [The Supreme] Court!

Yesterday, the US Court of Appeals for the 9th Circuit cleared the way for the extortion case against Former Rep. Rick Renzi (R-Ariz.) to proceed to trial. In the process, they flatly disagreed with a 2007 ruling by the Court of Appeals for the D.C. Circuit on a US representative’s right to advance notice for search and seizure. Given this conflict between two appeals courts – on an issue that pits congressional privilege against efforts to prosecute public corruption, we predict the U.S. Supreme Court will ultimately hear this case and sort out the issues.

On June 23, 2011, the U.S. Court of Appeals for the 9th Circuit squarely rejected arguments made by attorneys for former Rep. Rick Renzi (R-Ariz.) and held that an extortion case against Renzi can proceed to trial. Renzi had argued that the Constitution’s “speech or debate” clause shields him from prosecution because the allegedly corrupt acts he is charged with fall under the category of “legislative acts” that are protected by that clause.

As we wrote on this blog nearly a year ago, the indictment stems from a government land-swap deal that prosecutors say illegally benefited Renzi’s former business partner. Renzi allegedly used his seat in Congress to strong-arm people into land deals with the former partner, who then kicked back money to Renzi in complicated financial transactions.

The appeals court found that Supreme Court precedent compels the conclusion that allegedly corrupt acts by a legislator are not protected by the clause as “legislative acts.”

“Despite Renzi’s best efforts to convince us otherwise, we agree with the district court that the alleged choices and actions for which he is being prosecuted lie beyond those limits. We affirm the district court’s denial of relief on each of the issues properly raised on appeal,” the 9th Circuit held.

The unanimous ruling by a panel of the 9th Circuit not only permits the Renzi case to go forward and sets forth an interpretation of the “speech or debate” clause that is favorable to prosecutors looking into corruption in the national legislature. It also sets up a direct conflict with the U.S. Court of Appeals for the D.C. Circuit’s 2007 ruling in a case involving Rep. William Jefferson (D-La.) There, the appeals court held that a member of Congress must be provided advance notice and the right to review materials before a search of his office is conducted by prosecutors.

“Simply stated, we cannot agree with our esteemed colleagues on the D.C. Circuit. We disagree with both [the Jefferson ruling’s] premise and its effect and thus decline to adopt its rationale,” the 9th Circuit wrote.

We would not be surprised to see the U.S. Supreme Court agree to hear this case and sort out the issues.

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Jan 14
2011

Government Uses Wrong Statute to Prosecute Ex-D.C. Employee

On January 7, 2011, the D.C. Circuit threw out the conviction of former D.C. government employee Ikela Dean, noting that while she might be guilty of something, she was not guilty of the offenses for which she was indicted.

Dean, a former employee of the D.C. Department of Consumer and Regulatory Affairs, was involved with reviewing and processing license applications. In 2007, Dean began informing businesses that license fees could be paid by check, but that late fees had to be paid in cash. Dean submitted the checks for the licenses to the department but pocketed the cash submitted for the late fees.

Although Dean successfully kept the cash in the first seven applications that she processed, the eighth applicant was suspicious of the cash requirement for the late fees and notified the FBI, which set up a sting operation. The sting operation was successful, and Dean collected $1,275 from the “applicant” to cover the late fees. Dean was then arrested.

The trial court dismissed 12 of the 14 charges against Dean, but permitted the jury to consider two charges. The jury found Dean guilty of bribery and extortion. Dean was later sentenced to 27 months in prison.

The appellate court explained that bribery and extortion both require a quid pro quo, which the Supreme Court has defined as an agreement between the public official and a second person, in which the public official will perform an official act in exchange for a personal benefit. However, there was no evidence that Dean accepted the cash in exchange for being influenced to perform an official act like issuing a license. Rather, Dean accepted the money as payment for the license, the fees were required, and Dean did not promise any favorable processing of the application. There was no evidence of an agreement to pay an illicit benefit to in exchange for favorable treatment; therefore the bribery conviction was reversed.

Extortion, as elucidated by the Supreme Court, occurs when a public official “obtain[s] a payment to which he [is] not entitled, knowing that the payment [is] made in return for official acts.” Extortion also requires a quid pro quo, which means “there must be an agreement between the public official and the other party that the official will perform an official act in return for a personal benefit to the official.” Thus, Dean had to enter into an agreement to take the cash in return for performance of an official act. However, the agreement was for Dean to accept the cash on behalf of the DCRA and not to keep it personally.

As the appellate court pointed out, although “the evidence established that Dean intended to keep the $1,275 . . . the agreement was for Dean to accept the $1,275 on behalf of the DCRA. There is no evidence of an agreement between her and the undercover agent that the money was to go to her personally.” Therefore, the extortion conviction was also reversed because there was “nothing in the record wherein Dean suggested to the agent that the money was going into her pocket.”

The appellate court concluded: “We echo the sentiments of the trial judge who opined that the government mis-charged in this case; Dean may well be guilty of embezzlement or fraud, but not extortion or bribery as charged.”

Dec 28
2010

Skilling Fallout Doesn’t Spring Ex-Gov From Prison

The Supreme Court’s June decision in United States v. Skilling doesn’t give former Illinois Gov. George Ryan a “get out of jail free” card, a U.S. district judge has ruled.

Ryan was convicted in 2006 of a series of fraud, racketeering, and similar crimes growing out of his abuse of public office while he was governor and before that as the state’s secretary of state. He has been in federal prison since November 2007.

Last August, Ryan filed a petition under 28 U.S.C. 2255, which allows a federal prisoner to challenge his conviction and try to have it set aside if it was imposed in violation of law. His lawyers pointed out that Skilling made a substantial change in federal fraud law, rejecting the concept of “honest services” fraud in cases other than “paradigmatic cases of bribes and kickbacks.”

So the question before U.S. District Judge Rebecca Pallmeyer of the Northern District of Illinois was the nature of Ryan’s convictions, which of course took place in the pre-Skilling period, and the nature of the jury instructions in his case.

Judge Pallmeyer, in a detailed 59-page opinion, turned aside all of Ryan’s arguments. The “conduct for which [Ryan] was convicted – steering contracts, leases, and other governmental benefits in exchange for private gain – was well-recognized before his conviction as conduct that falls into the ‘solid core’ of honest services fraud,” the judge wrote, noting that this conduct was exactly what the Supreme Court said in Skilling was the “proper target” of the “honest services” law.

But that was not the end of the judge’s analysis. At Ryan’s trial, prosecutors did not present solely a straightforward bribery theory. They also relied on the argument that Ryan, as a public official, did not disclose a conflict of interest between his public duty and his desire to bestow benefits and government contracts upon his friends. This was exactly the theory that the Supreme Court rejected in Skilling.

Judge Pallmeyer, in fact, found that several of the jury instructions were in error because they relied on legal theories that are now foreclosed by Skilling. But she also found them to be harmless error – and thus, that there were insufficient grounds to set aside Ryan’s convictions.

The judge had to look closely at exactly what facts the jury had found in each count of Ryan’s case and separate out a bribery theory (still fine after Skilling) and a conflict-of-interest theory (no longer acceptable). For each count, the judge held that the jury had found enough facts to establish a bribery theory that still survives after Skilling.

Even though the jury instructions included some legal errors, Judge Pallmeyer wrote that they still required the jury to find that Ryan ”did not act in good faith, that he acted for private gain, and that the ‘stream of benefits’ ” that flowed between him and a business associate “were intended to influence him in his official duties.” That amounts to bribery under federal law, and that was enough to uphold Ryan’s convictions.

This case shows, at the very least, how complicated the application of Skilling is going to be. In a very precise, fact-intensive process, prosecutors, defense attorneys, and judges will need to sort out the facts of past white-collar cases and see what survives.

Sep 16
2010

Impeachment Trial of Federal Judge Raises Issue of ‘Kickbacks’

The impeachment trial of U.S. District Judge G. Thomas Porteous Jr. is continuing before a U.S. Senate committee. Porteous, a federal judge in New Orleans, is accused of four counts of corruption. Each count is referred to as an article of impeachment.

The first article of impeachment involves what some have described as a “kickback” scheme. Porteous, as a state court judge before he was named to the federal bench by President Clinton in 1994, frequently appointed lawyers from the firm of Amato & Creely as “curators” in cases. In Louisiana, curators are assigned by judges to represent civil defendants whom a plaintiff cannot locate, such as targets of home foreclosures. In exchange for these small legal assignments, the firm allegedly gave Porteous small amounts of money. This article alleges that the firm received about $40,000 for the curatorships and paid the judge a total of about $20,000.

The article of impeachment, notably, does not use the term “kickback,” which implies a corrupt quid pro quo payment – i.e., one made to the judge in exchange for a judicial act. The two lawyers involved, Jacob Amato and Robert Creely, who were called as prosecution witnesses in the impeachment case, testified that they gave money to the judge out of friendship, not in exchange for the curatorships.
However, it seems possible to us that Porteous could be convicted on this count without any need for the impeachment prosecutors, who are members of the House of Representatives, to prove such a direct link.

The way the article is written, Porteous is accused not of any purported kickback but of failing to disclose his “corrupt financial relationship” with the law firm when he denied a motion to recuse himself, as a U.S. district judge, from a case in which the firm represented a party. The “scheme” is described as one in which Porteous appointed a lawyer as a curator in hundreds of cases and “thereafter requested and accepted” a portion of the curatorship fees. No quid pro quo is alleged.

This first article of impeachment also charges that Porteous continued to take money from the law firm even as a U.S. district judge – at a time, of course, when he was no longer giving out curatorships under state law. The article does not outline a reason why these payments continued even when Porteous was a federal judge. He ruled in favor of the law firm’s client without disclosing his relationship with the firm, the article alleges. Again, even when no direct quid pro quo was alleged, if Porteous was receiving thousands of dollars from the firm, he can be seen as having a statutory obligation to disclose this before ruling in the case.

The article concludes that by not making these disclosures, Porteous “deprived the Fifth Circuit Court of Appeals of critical information for its review of a petition for a writ of mandamus” that was seeking to reverse his denial of the recusal motion. His conduct, the article says, “deprived the parties and the public of the right to the honest services of his office.” Ordinary federal law is not binding in an impeachment case, but it’s interesting that under the Supreme Court’s interpretation of “honest services” fraud in the Skilling case earlier this year, a kickback scheme remains an instance of the deprivation of honest services.

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About Ifrah Law

Crime in the Suites is authored by the Ifrah Law Firm, a Washington DC-based law firm specializing in the defense of government investigations and litigation. Our client base spans many regulated industries, particularly e-business, e-commerce, government contracts, gaming and healthcare.

Ifrah Law focuses on federal criminal defense, government contract defense and procurement, healthcare, and financial services litigation and fraud defense. Further, the firm's E-Commerce attorneys and internet marketing attorneys are leaders in internet advertising, data privacy, online fraud and abuse law, iGaming law.

The commentary and cases included in this blog are contributed by founding partner Jeff Ifrah, partners Michelle Cohen, David Deitch, and associates Rachel Hirsch, Jeff Hamlin, Steven Eichorn, Sarah Coffey, Nicole Kardell, Casselle Smith, and Griffin Finan. These posts are edited by Jeff Ifrah. We look forward to hearing your thoughts and comments!

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