Departing US Atty Garcia: Keep Focus On White-Collar Crime
In a wide-ranging interview reflecting on his tenure last week, Garcia, the U.S. Attorney in Manhattan, told Dow Jones Newswires that white-collar crime and terrorism are the top priorities for the office and likely always will be.
Given the current financial upheaval, white-collar prosecutions will have added importance, Garcia said. However, the crisis likely won't alter the approach of the office, which was founded in 1789, or bring added pressure to make cases, he said.
"We're here to do what we always do," said Garcia, whose office sits just blocks away from Wall Street.
Garcia, 47 years old, will step down on Monday after three years in the post. Garcia, who prosecuted several high-profile terrorism cases as an assistant U.S. attorney in the Southern District, returned to the office in 2005 after heading the Immigration and Customs Enforcement arm of the U.S. Department of Homeland Security and its predecessor, the U.S. Immigration and Naturalization Service.
The New York Times and other published reports have indicated possible Garcia replacements include Deputy U.S. Attorney Lev Dassin, who will temporarily fill the post until President-elect Barack Obama choses a permanent replacement; Mark Pomerantz, a white-collar litigator in New York and former prosecutor; and Preet Bahrara, a former prosecutor and chief counsel to Sen. Charles Schumer, D-N.Y.
A number of U.S. attorneys are expected to leave in the coming weeks in anticipation of Obama putting his own stamp on the U.S. Department of Justice.
Gains In Public Corruption Prosecutions Garcia said that he's most proud of the efforts the office has made in fighting public corruption and the establishment of a separate terrorism unit on his watch.
In the past few years, Garcia's office has brought several high-profile public-corruption cases, including cases against former New York City Police Commissioner Bernard Kerik; Norman Hsu, a one-time Democrat fundraiser, and persons associated with the U.N.'s oil-for-food program.
In another high-profile case handled by the public-corruption unit, Garcia opted last month not to bring criminal charges against former New York Gov. Eliot Spitzer for payments made to a high-end prostitution ring.
Garcia said the Justice Department's policy has been to prosecute the commercial operators of prostitution services, rather than so-called johns. Also, there were no "aggregating factors," such as child endangerment or sex trafficking, he said.
Spitzer acknowledged responsibility, there was no evidence of misuse of campaign or public funds and there was "insufficient evident" to bring charges against for any offense relating to the withdrawal of funds or payments to the ring, Garcia said.
White Collar A Focus Given its proximity to Wall Street and reputation as a leading prosecutor of corporate crime and securities fraud, Garcia's office has handled a number of high-profile white-collar cases in his time in the post.
The cases have ranged from improper options backdating and financial chicanery to old-school insider trading.
Shortly after he returned to the Southern District in September 2005, Garcia's office brought criminal charges in record time against Phillip R. Bennett, the one-time chief executive of Refco Inc., in a scheme to hide the commodities broker's financial troubles.
Bennett and three other former executives pleaded guilty to the charges and Bennett himself began serving a 16-year prison sentence in September.
In September 2005, Samuel Israel III and Daniel Marino, the top executives of Bayou Management LLC, pleaded guilty to criminal charges in a scheme that defrauded the defunct hedge-fund firm's clients out of more than $400 million. A third former executive pleaded guilty to conspiracy in 2006.
In January, Monster Worldwide Inc. (MWW) founder Andrew J. McKelvey entered into a deferred prosecution agreement over improper stock-options backdating at the parent company of online job-search Web site Monster.com. The company's former general counsel pleaded guilty last year and its former president and chief operating officer is awaiting trial.
Last month, ex-money manager Alberto Vilar and his business partner Gary Tanaka, both former executives of defunct Amerindo Investment Advisors, were convicted on fraud and other charges for allegedly bilking investors, including the mother of actress Phoebe Cates, out of millions of dollars.
In one of the more outlandish insider trading cases, two former Goldman Sachs Group Inc. (GS) employees - David Pajcin and Eugene Plotkin - orchestrated a scheme that included trades based on stolen prepublication copies of McGraw-Hill Cos.' (MHP) BusinessWeek magazine and leaks from a grand-jury probe involving Bristol-Myers Squibb Co. (BMY).
Six people, including Pajcin and Plotkin, ultimately pleaded guilty in the scam, which generated at least $6.7 million in illegal proceeds.
Office Brings 'Forward-Leaning' Cases However, Garcia's tenure hasn't been without its rocky moments.
In 2006, Garcia opted not to pursue a third trial against former star technology banker Frank Quattrone on obstruction-of-justice charges after his 2004 conviction was overturned and reached a deferred prosecution agreement with him. Quattrone is back in the financial-services industry, launching a technology-focused banking and advisory boutique firm in March.
Last year, a federal judge dismissed 13 former KPMG LLP executives in a closely watched tax-shelter fraud case after finding prosecutors violated their rights to counsel by putting undue pressure on the accounting firm not to advance them defense costs. A federal appeals court upheld the judge's decision this summer.
Six people previously pleaded guilty in the matter and the four remaining defendants in the case are currently on trial.
In August, a federal judge vacated the guilty pleas of two former floor traders at Van der Moolen Specialists USA LLC in a case revolving around allegedly improper trades for their firms' accounts at the New York Stock Exchange.
It was a stunning turnaround for prosecutors, who initially charged 15 specialists in 2005 for allegedly making illegal trades. Eight cases were dismissed, two specialists were acquitted at trial and the convictions of three others were ultimately overturned.
"This office brings forward-leaning, tough cases; novel cases," Garcia said.
The specialist case is an example of that, Garcia said. Sometimes, those cases don't work out the way you anticipated, he said. "You have to accept that," he said.
Notably, the Quattrone, KPMG and specialist cases were brought under Garcia's predecessor.
Lehman, Other Financial Probes Ongoing Despite some setbacks in his tenure, there should be plenty for Garcia's successor to pursue.
Garcia wouldn't discuss specific investigations during last week's interview, but his office is conducting a number of probes related to the financial crisis.
Garcia's office is one of three U.S. attorney's offices in New York and New Jersey probing the collapse of investment bank Lehman Brothers Holdings Inc. (LEHMQ), a lawyer for the firm has confirmed.
In October, Garcia took the rare step of confirming his office is conducting a broad investigation with New York Attorney General Andrew Cuomo's office of the credit-default swap market including potentially improper trading of swaps.
Earlier this year, Garcia also announced the formation of mortgage fraud group to investigate frauds in the subprime and other housing markets.
For now, Garcia plans to take a two-month break and then focus on white-collar litigation at a private practice law firm.
Garcia declined to name the firm, but published reports have indicated he's returning to Kirkland & Ellis LLP.
-By Chad Bray, Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com
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(END) Dow Jones Newswires
December 01, 2008 16:58 ET (21:58 GMT)
Publié le 01 Décembre 2008 Copyright © 2008 Dowjones
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