Category Archives: Public corruption

Former IRS Auditor Arrested for Corruption Charges

A former IRS official was arrested this past week for violating federal ethics law and whistleblower protection laws.

According to a complaint filed on September 26th by the US Attorney’s office, Dennis Lerner, 59, was charged with negotiating for employment with Commerzbank, a large German bank, while he was auditing the bank. He is also charged with improperly contacting IRS officials after accepting a position with the bank and releasing the identity of a whistleblower.

The scandal began when a whistleblower told the IRS that the bank had underreported its income by $1 billion. Commerzbank then came under IRS investigation, which Lerner took part in.

The criminal complaint alleges that Lerner had met with Commerzbank officials to negotiate a settlement for the unpaid taxes. Those negotiations led to a settlement of $210 million, which was only 62% of Commerzbank’s potential tax liability for its unreported income. On August 11, just one day after the bank paid the IRS the settlement, Lerner accepted a position with the bank.

After accepting the position Lerner allegedly revealed the name of the whistleblower, saying “Doesn’t it suck that someone you trust would turn their back on you?” Lerner is also charged with contacting his former collegauges at the IRS in order to inquire about the bank’s case, which is unlawful according to federal ethics law. That IRS employee ended up contacting the IRS’ inspector general in order to begin the investigation which resulted in the criminal charges Lerner faces today.

After Lerner’s arrest he was released on a $300,000 personal recognizance bond. If found guilty on all 4 charges Lerner could face 20 years in federal prison.

Complaints Against Secret Service Agents Include Embezzlement and Sex Crimes

A heavily censored 229 page government published list reviews serious complaints filed against U.S. Secret Service agents since 2004.

The list of complaints was released Friday afternoon in response to a Freedom of Information Act request by several news organizations following the accusations of Secret Service involvement with prostitutes in Columbia. The complaints include allegations against Secret Service employees with the department of Homeland Security’s ethics officer, the Inspector General.

Many of the charges involved serious crimes involving public funds and sexual abuse:

  • In January 2011 the New York Police department arrested an investigative support assistant on charges of sexual abuse. Although the documents did not describe how the case was resolved.
  • In October 2003 an anonymous complaint  was filed alleging that a Secret Service agent “may have been involved with a prostitution ring.” In 2005 another officer was arrested for solicitation in a public park. The information revealed in the list did not discuss how either cases were resolved.
  • In March 2011 a complaint alleged agents with theft of public money, or embezzlement.
  •  Multiple allegations of sexual assault were reported.
  • One agent allegedly threatened to shut down a strip club that charged $40 for lap dances and $25 for table dances.

Though the allegations are shocking, many of the allegations include incomplete information, and could be frivolous complaints. Most of the complaints did not discuss convictions for any crimes. Although, some of the reported allegations were handled through administrative disciplinary proceedings.

As a result of this information many are calling for a widespread investigation of the Secret Service’s internal operations.

 

Alabama Grand Jury Investigates Public Corruption

The first Alabama Special Grand Jury to be assembled in 19 years has been acquiring information on public lawmakers and others to ferret out corruption in the state.

A little over a month ago Alabama Attorney General Luther Strange established a Special Grand Jury to investigate cases of public corruption. Although the grand jury proceedings are closed to the public, sources say that testimony garnered thus far has lead to a slowly growing body of evidence for the indictment of several high profile individuals in the state. Further, sources say that a new round of subpoenas have been recently released to interview officials throughout many state agencies.

An anonymous person who received a subpoeanoa stated; “in Alabama if there is public corruption, there is gambling money somewhere.”

The Grand Jury is currently assembled in Montogmey. The AG’s office is questioning witnesses and requesting documents.

Attorney General Strange has pledged to step up efforts to eliminate public corruption in Alabama. This effort is likely in response to federal charges convictions in recent years of Alabama government officials.

In 2010 state representatives and senators were charged, but not convicted, of a plot to buy and sell votes on a gambling bill before the legislature.

In 2006 former Governor Don Siegelman was convicted of accepting $500,000 in campaign contributions in exchange for appointing the former CEO, Richard Scrushy, of a healthcare organization to a state regulatory board. In that case Scrushy and Siedelman were sentenced to about seven years prison time.

Earlier this month the Supreme Court rejected hearing Scrushy and Siegelman’s case.

Former VP Al Gore Helps Raise Money for Former Alabama Governor

Al Gore, former Unites States Vice President, is aiding former Alabama Governor Don Siegelman’s fundraising efforts this week by signing an email plea for contributions to his legal fund.

This is the second time Gore has lent his name to the effort.  In 2008, Gore also supported the former governor’s legal defense fund.

The U.S. Supreme Court will make a decision next week whether it will hear the appeal of Siegelman’s conviction on public corruption charges six years ago.

Gore’s email states, “Don Siegelman’s recent petition to the U.S. Supreme Court will make history-one way or the other-and may be the most important decision for the reservation of justice and democracy that the court will have rendered in recent times.”

On Thursday, at the conference of the justices, Siegelman’s appeal was considered.  This means, that as soon as Monday, it could be released on the list which announces which petitions they will accept and which they will not.  Richard Scrushy’s, HealthSouth founder, appeal is also on the same schedule.  Scrushy and Siegelman were convicted after a jury trial in Montgomery on charges that they exchanged donations to Siegelman’s lottery fund for an appointment to a state health board.  Scrushy contributed $500,000 in donations to Siegelman’s 1999 campaign to establish a state lottery.

There was no evidence at trial of a conversation between the two men discussing the appointment, but prosecutors urged jurors in the case, to look at the totality of the evidence.  This evidence included an aide’s testimony that Siegelman suggested the $500,000 figure to a lobbyist as a way for Scrushy to make amends for supporting his 1998 campaign opponent – $350,000 “plus interest,” the state aide said.

Siegelman has asked the U.S Supreme Court to review his conviction as his lawyers pointed to a court ruling in a West Virginia extortion case that said campaign contributions are subject to criminal prosecution only when they are made “in return for an explicit promise or undertaking by the official to perform or not perform an official act.”

Siegelman’s conviction on the bribery charge is being upheld by the 11th Court of Appeals which found that, while there has to be an explicit agreement to swap money and action, it doesn’t have to be verbalized.  Jurors are free to interpret the actions of defendants in determining whether there was a corrupt deal, the court ruled.

The original article can be read here.

Edwards campaign finance trial commences

Opening arguments have begun in the trial of former presidential candidate John Edwards. Edwards is alleged to have accepted nearly $1 million in illegal campaign contributions in order to hide an affair between Edwards and Rielle Hunter, a videographer who worked for his campaign.

While admitting that he had made a very serious mistake in carrying on the affair, he maintained that he is innocent of criminal wrongdoing regarding the alleged violations of campaign finance law.

The specifics, as related by the prosecution, involve several bills paid by donors in order to help Edwards avoid public scrutiny amid his presidential campaign and wife Elizabeth Edwards’ struggle with cancer. Hunter had given birth to a daughter in 2008. Edwards admitted that he was the child’s father in 2010.

Allison Van Laningham, Edwards’ defense attorney, argued that the affair “may be a sin, but it is not a federal election crime,” according to the Los Angeles Times. Van Laningham continued, urging the court to “[f]ollow the money” and suggesting that campaign aide Andrew Young sought to exploit Edwards’ situation for his own financial benefit.

Meanwhile, prosecutors attempted to portray Edwards as a dangerously ambitious politician who deliberately broke the law in order to deceive the public and thereby preserve his presidential aspirations. Young is expected to be among the most important witnesses for the prosecution’s case.

The full report from the Los Angeles Times can be found here.

The Edwards scandal has played itself out on the national stage, but the basic questions appear similar to those found in the more common cases of public corruption. Among the most significant is that posed by Van Laningham in her opening argument: who benefits? Young authored a book on the scandal; Van Laningham observed that Young is currently seeking a movie deal as well. In essence, Young has monetized his involvement in the situation. It will be interesting to see to what extent this casts doubt on his credibility.

Attorney General announces new investigative unit targeting public corruption

Alabama Attorney General Luther Strange announced a fresh effort to crack down on public corruption, touting a partnership between multiple state agencies, including a new division of the Attorney General’s office created for the purpose.

A statement released by Strange’s office emphasized the consequences of “[c]rimes involving the breach of trust by public officials and employees.” The statement asserted the importance of combating the misuse of taxpayer money, citing the “scarce resources” available to local government.

The partnership consists of both investigators and prosecutors, and will be headed by Special Prosecutor Matt Hart. Agencies represented include the Ethics Commission, the Criminal Justice Information Center, the Department of Examiners of Public Accounts, the Department of Revenue, and the Department of Public Safety.

Hart released a statement as well, noting that “[i]nvestigating and prosecuting violations of the public trust is one of the most challenging missions in law enforcement.” Hart also pledged to maintain “the highest standards of professionalism, accountability, and impartiality” as work begins.

The full report from The Birmingham News can be found here.

The efficacy of this partnership remains to be seen. While it may facilitate the exchange of information between various government and law enforcement agencies, it does not, at first glance, appear to change the means by which investigators collect evidence, or the ways in which prosecutors construct their cases. Neither does it appear to address the sharply political undertones of accusations of public corruption, which can influence significantly the course of an investigation.

If you have questions about how this development may affect you, contact one of our skilled, experienced attorneys for further information.