South Korean businessman Tongsun Park first burst on the scene in the 1970s when he was indicted on influence-peddling charges in the Koreagate contributions scandal, although the charges were eventually dropped after he fled the United States. With the United Nations’ Oil-for-Food program designed to get humanitarian aid into Iraq during the embargo after the first Gulf War, Park got involved in helping the Iraq government try to bribe UN officials, including then-Secretary General Boutros-Ghali, to set up the program in a way that favored the Iraqi government.. The government of Saddam Hussein gave Park $1 million in cash, much of which went into a company owned by a UN official. In July 2006, Park was convicted of conspiracy to act as an unregistered agent of the Government of Iraq. U.S. District Judge Denny Chin sentenced Park to the maximum five-year prison term authorized for his conviction (see USAO press release here), stating that "[y]ou either bribed a U.N. official or you were acting as if you were going to bribe a U.N. official." Park was immediately taken into custody at the end of the sentencing hearing. A Washington Post story (here) reviews the case and Park’s history of involvement in various lobbying efforts. (ph)
Category: Sentencing
-
Blog co-editor Ellen Podgor published an interesting article in the Yale Law Journal Pocket Part about the current nature of white collar crime sentences, "Throw Away the Key." She discusses the recent phenomenon of lengthy sentence for white collar defendants who are almost always first-time offenders posing no threat to society. She argues:
No doubt many of these white-collar offenders committed thefts within companies, and in some cases decimated employees’ and investors’ savings. But the sentencing Guidelines limit courts’ abilities to consider factors such as the motive of the perpetrator, the benefit he or she received, and the extenuating circumstances that caused the harm. Instead, the judge may only consider the sentencing Guidelines’ mathematical computation of loss when imposing a sentence. As a result, in some courts the person who steals to benefit the company without personal remuneration can receive a comparable sentence to the rogue employee who cashes in his or her company stock to obtain an immediate personal profit. The accused becomes irrelevant in a sentencing world ruled by the cold mathematical calculations found in the sentencing Guidelines. Not even the Supreme Court’s decision in United States v. Booker, which grants trial judges some flexibility after using the Guidelines, provides much relief. The statistics show that judges usually stick to the sentences provided in the Guideline grid.
A response to Professor Podgor’s article was written by Andrew Weissmann and Joshua Block from the Jenner & Block firm — Weissmann was head of the Enron Task Force before leaving for private practice. Their article, "White-Collar Defendants and White-Collar Crimes," agrees with her point that long sentences for white collar defendants do not provide much deterrence, but disagree with the argument that such defendants should be viewed differently. They argue:
Most troubling are Podgor’s arguments with respect to white-collar criminals. It is one thing to say that certain criminal acts are not as bad as others. But it is quite another to argue that people who commit white-collar crimes as a generalized group should be punished differently from those who commit other crimes. Any such differences often correlate in fact to race and almost always to class. One of the laudatory goals in promulgating the Sentencing Guidelines was to remedy the potential for hidden—or unhidden—bias in favor of “white collar” defendants.
The discussion is especially pertinent because the pace of white collar crime prosecutions continues. Lord Conrad Black faces securities fraud, conspiracy and RICO charges in Chicago over transactions at Hollinger International when he was CEO, and former Qwest CEO Joseph Nacchio will go on trial in Denver on insider trading charges for selling over $100 million in shares shortly before the company’s stock price collapsed due in part to accounting problems. Like CEOs before them, these men face substantial sentences, which could amount to a virtual life term, for conduct that involved rather mundane corporate transactions. (ph)
-
West Palm Beach (Fla.) attorney John Garcia learned the hard way that lawyers have to keep their distance from clients, especially when a client is involved in a significant drug dealing operation. Garcia received an 18–month sentence after pleading guilty to three counts of failing to file CTRs for cash transactions over $10,000 and one count of making a false statement to a DEA agent. The case arose out of an investigation of Garcia’s client, Joel McDermott, who was convicted on drug distribution charges. In looking at McDermott’s assets after his conviction, the DEA noticed that payments were being made on a house being built in Wellington, Fla., in his name. Needless to say, McDermott was more than willing to roll over on his attorney, and it came to light that he gave Garcia cash to purchase cashier’s checks to make the payments. As described in a press release (here) issued by the U.S. Attorney’s Office for the Southern District of Florida:
Garcia admitted structuring cash transactions in his bank account to avoid the filing of currency transaction reports that would have disclosed the source of the monies and their amounts; he also admitted that he lied to Special Agents of the Drug Enforcement Administration when he said that: (1) he had no financial or equitable interest in the construction of a residence in the name of Joel McDermott located in a real estate development known as “Olympia;” and (2) he did not purchase cashier’s checks from Bank of America for the residence of Joel McDermott located in a real estate development known as “Olympia.” In fact, however, Garcia had a financial and equitable interest in the residence in “Olympia” and had purchased several cashier’s checks at Bank of America with cash given to him by Joel McDermott. Thereafter, Garcia caused those cashier’s checks to be tendered to Minto Homes for the benefit of Joel McDermott and a home McDermott was building in “Olympia.”
A Palm Beach Post story (here) discusses the sentencing hearing for Garcia, attended by a number of defense attorneys and a retired circuit court judge, who attested to Garcia’s integrity. Indeed, the Assistant U.S. Attorney prosecuting the case said that Garcia is "an honorable man of his word." While U.S. District Judge Daniel Hurley expressed some sympathy, noting the number of supporting letters he received, he also pointed out that Garcia’s conduct was "180 degrees at odds with the person we thought we knew." While the judge mused about possibly giving a higher sentence than called for by the Federal Sentencing Guidelines, he ended up giving Garcia a term at the bottom of the sentencing range.
The old adage is that the client goes to jail and the lawyer goes to lunch (or dinner, or back to the office). When the attorney crosses the line and starts helping a client launder money, then the last person on earth that client will protect is the lawyer, who will join the client in jail. (ph)
-
In yet another example of the wide disparity between those who went to trial and those who cooperated and plead guilty in Enron related cases, CNN Money reports that "two former energy traders" received sentences of two years probation and a fine.
Is it too risky for an accused to go to trial in white collar cases, especially fraud related cases that include a possible significant "fraud loss" if a conviction results? Are defendants being deprived of their constitutional right to a jury trial when there is an enormous disparity between going to trial and being convicted and pleading and cooperating?
(esp)
-
Jamie Olis, who will be in prison for 1000 days this coming Valentine’s Day, has finally been moved to the FCI at Bastrop. He sat in the Houston Dentention Center for some of this time waiting to be reassigned following the reversal and remand of his sentence. (see here). Tom Kirkendall at Houston ClearThinkers discusses here the treatment that Olis received. The Jamie Olis Story is one of the saddest in the white collar area. A young man who goes to trial and ends up with a lengthy prison sentence while his fomer boss who pleads serves substantially less. And although his original resentence was cut down, this case is a classic for understanding prosecutorial power and for understanding the cost of taking a risk and availing oneself of the right to a jury trial.
(esp)
-
The U.S. Attorneys Office for the Central District of California issued a press release telling of the 25 year sentence of an individual who was found guilty after a jury trial. The release states:
"A Southern California man found guilty of bilking the customers of Employers Mutual LLC – a company that falsely purported to provide health care coverage to more than 20,000 people across the United States – was sentenced today to 25 years in federal prison and was ordered to pay more than $20 million in restitution."
James Graf was "found guilty by a federal jury in Los Angeles in late 2005 of conspiracy, five counts of mail fraud, 10 counts of misappropriation in connection with a health care benefit program, six counts of money laundering and one count of obstruction of justice." The press release notes "that Employers Mutual, LLC is unrelated to Employers Mutual Insurance Company of Des Moines, Iowa."
(esp)
The press release is here –
-
Wall Street Jrl reports here that Hyundai Motor Co. Chairman Chung Mong Koo has been sentenced to three years. The Wall Street Jrl notes that whether he will actually serve jail time remains to seen.
(esp)
-
No one really wants to go to jail, but once you’re in, it would probably be nice to get assigned to a decent facility to serve out your term rather than spend time in a cramped holding facility for over a year. That is the plight of Jamie Olis, however, who seems to be in the netherworld of the federal Bureau of Prisons, having been in the Houston Detention Center since December 2005 awaiting resentencing and then reassignment. As a picture of the Houston federal jail shows (here), this is not a particularly pleasant place, one that former Enron CFO Andrew Fastow found particularly despicable. A Houston Chronicle story (here) discusses the delay in assigning Olis after his resentencing in October 2005 to a six-year term for his fraud conviction, down from the original twenty-four year sentence. It recounts the BOP’s excuses for not sending him to a regular facility, even after other high-profile defendants from the Enron case who were sentenced after him have received their assignments.
By focusing media attention on the BOP, the Chronicle story could have the unintended consequence of prodding the bureaucracy into assigning Olis to a facility even further away from his wife and child, who live in San Antonio. Beware of rousing the sleeping bureaucrat, particularly one with virtually unreviewable discretion on where to send a person to spend a substantial period of time. Tom Kirkendall has a good post on this topic on the Houston’s Clear Thinkers blog (here), noting that the BOP’s excuses for not assigning Olis to a permanent facility ring pretty hollow. (ph)
-
A former finance official for the Coalition Provisional Authority in southern Iraq received a nine-year sentence on corruption, money laundering, and weapons charges. Robert Stein worked for the CPA in administering the rebuilding effort, and engaged in a wide-ranging corruption scheme to award contracts to favored companies. According to a Department of Justice press release (here):
Stein admitted to participating in a complex bribery, fraud and money laundering scheme while serving as the Comptroller and Funding Officer for the CPA-SC. From December 2003 through December 2005, Philip H. Bloom, a U.S. citizen who owned and operated several companies in Iraq and Romania, Bruce D. Hopfengardner, a Lieutenant Colonel in the U.S. Army Reserves, and numerous public officials, including several high-ranking U.S. Army officers, conspired to rig the bids on contracts being awarded by the CPA-SC so that all of the contracts were awarded to Bloom. In return, Bloom provided the public officials with over $1 million in cash, SUVs, sports cars, a motorcycle, jewelry, computers, business class airline tickets, liquor, future employment with Bloom, and other items of value.
In addition, Bloom laundered over $2 million in currency that Stein and his co-conspirators stole from the CPA-SC that had been designated to be used for the reconstruction of Iraq. Bloom then used his foreign bank accounts in Iraq, Romania and Switzerland to send the stolen money to Stein, Hopfengardner and other public officials in return for the awarded contracts. In total, Bloom received over $8.6 million in rigged contracts.
Bloom, one of the coconspirators identified in the government statement, also entered a guilty plea and is scheduled to be sentenced on February 16, 2007.
This is not the only front in the investigation of corruption and contract abuse involving the Iraqi reconstruction. The House Oversight and Government Reform Committee will be conducting hearings on the topic, and a statement on the Committee website (here) states:
Rep. Waxman and other members of Congress have been seeking information on contracts entered into by the Administration for reconstruction and development work in Iraq, including several billion dollar contracts with a subsidiary of Halliburton Corporation. Many questions have been raised about the Iraq contracting process, including questions on the seemingly inflated prices charged by Halliburton to import gasoline from Kuwait into Iraq and Halliburton’s admission of kickbacks to company officials.
Needless to say, the change in control on Capitol Hill will make these hearings quite contentious. (ph)
-
The sentences for two individuals who plead guilty to a 3 count indictment that related to polluting navigable waters were: 1) 5 months in prison and 2 months supervised release and 2) 3 years probation. Both individuals had restrictions placed upon them to preclude them from polluting U.S. waters. According to the DOJ press release,
"A joint factual statement filed in federal district court in New Jersey stated that on the night of Jan. 3, 2006, U.S. Coast Guard inspectors boarded the Sun New and discovered that members of the engine room crew had used bypass hoses to discharge oily wastes overboard into the ocean without using the vessel’s oily water separator. Upon further investigation, inspectors discovered that the crew of the Sun New had disposed of significant amounts of oil waste into the ocean at least twice during the voyage from South Korea to New Jersey. In September a grand jury in Newark, N.J., returned a three-count indictment charging Chang-Sig O and Mun Sig Wang with conspiracy, obstruction of justice, and a violation of the Act to Prevent Pollution from Ships in connection with the use of the two bypass hoses."
It is interesting to see the sentences given with respect to an environmental offense, albeit an obstruction of justice charge in one case and a violation of the Act to Prevent Pollution from Ships in the other case. Perhaps the greatest deterrent in this sentence was their restrictions on operating ships in U.S. navigable waters. The company, Sun Ace Shipping Company, had previously plead guilty and was "fined $400,000 [and] ordered to pat $100,000 as a community service payment. They were prohibited from "returning to the U.S. for three years for similar violations in conjunction with this case."
(esp)
MattBray.net 