Political Cases Highlight Hidden DOJ Incentives

On March 24, we examined developments this week in two of the Justice Department’s major white-collar crime prosecutions of the past decade. In the cases, the DOJ years ago secured bribery convictions against the prominent Mississippi trial attorney Paul Minor and insider trading convictions against former Qwest Communications CEO Joseph Nacchio. Minor and Nacchio are imprisoned under long terms, but are now seeking redress in various ways.

Today, we’ll review the ripple effect of such prosecutions on regional politics and personal privacy. Additionally, we’ll explore how these high-profile cases hold lessons for the always-difficult key issue for a client: Will a defense lawyer use expertise and connections to fight all-out? Or will problems arise from a lawyer’s almost inevitable incentives to foster fees and good relationships with the Justice Department, judiciary and others who can help maintain good standing for future cases?

The politics of our justice system often leads high-profile defendants to woo politically connected defense attorneys even though our system ostensibly is non-partisan. One example is Minor, who became his state’s leading donor to Democrats after a controversial and highly successful career as a torts attorney suing powerful companies. For his appellate work, he was able to recruit former U.S. Solicitor General Theodore Olson, one of the nation’s most prominent appellate experts and Republican insiders. Olson was a key figure in creating the Federalist Society to reshape the nation’s judiciary and bar in more conservative directions, and more recently was appointed by President Obama to join the Council of the Administrative Conference of the United States, a public-private partnership charged with providing nonpartisan, practical assessments and recommendations to improve agency procedures and operations. Olson’s team from Gibson Dunn & Crutcher includes David Debold, who argued Monday to U. S. District Judge Henry Wingate in Jackson, MS that Minor’s convictions must be vacated.

It appears that Olson has extended himself beyond the norm of elite lawyers in vigorous advocacy, including by making known his interest in the case in several announcements. Many top defense attorneys refrain from that in fear of antagonizing judges, prosecutors, bar groups or other VIPs, leaving clients essentially silenced in the face of the DOJ’s powerful and ongoing public relations outreach to the news media. Nacchio hired for his appellate work the Justice Department’s former Deputy Solicitor General Maureen Mahoney of Latham & Watkins. She is another member of the highest elite of appellate litigators and Republican insiders. Apparently, she also extended herself beyond the norm after Nacchio lost his Supreme Court appeal in October 2009. "I am deeply disappointed by the court's decision,” she wrote a reporter, “because I am convinced that he is innocent and did not receive a fair trial." As perspective, I’ll disclose that I am familiar with both firms after I retained each of them during the 1990s for highly paid work in return for cost-effective results when I was CEO of a Washington, DC–based Wireless Communications Association. Separately, I had been an associate at Latham and a newspaper reporter covering courts full-time earlier in my career. So I have experience in billing clients, getting billed for many years and more generally observing up close the kinds of fee cost-benefit questions that can arise at major firms.

Among the larger issues related to the Nacchio case is a widespread suspicion raised by Nacchio and  independent observers that the Bush DOJ’s unusually vigorous prosecution of him at least partly stemmed from his reported refusal in 2001 ─ alone among top telco CEOs ─ to comply with then-secret federal requests to disclose customer data to the government in ways he regarded as illegally violating customer privacy. As further background, Congress, the courts and the traditional news media have been extraordinarily timid about probing the extent of  government surveillance for fear of antagonizing authorities who invoke national security concerns.

By contrast, a courageous AT&T senior technician named Mark Klein stepped forward to say he discovered that his company was illegally intercepting and storing billions of customer emails and phone calls in cooperation with the National Security Agency from NSA’s perch a San Francisco office where Klein worked. Klein was unable to find a news organization to break the story until Wired Magazine did so after many months. Klein, in an interview with the Justice Integrity Project and in his 2009 book “Wiring Up the Big Brother Machine,” says the New York Times waited a year to break the story. It finally did so, he says, only because Wired Magazine dared go first and because Times reporter James Risen was disclosing the story also in a forthcoming book. Klein says he has never been able to obtain interest by Congress in the topic although he thought it his duty as a citizen to volunteer to provide his eye-witness account in testimony if requested. That's never happened, and he has given up trying.

As a Presidential candidate, Sen. Barack Obama vigorously opposed immunity for telecom companies for illegal citizen surveillance. After Obama won the Democratic party nomination he promptly reversed course and joined Senate colleagues from both parties to approve immunity for AT&T and telcos participating in the government's surveillance program of U.S. email and telephone traffic.

In a related development, a unanimous federal appeals court revisited the issue this week by reinstating a right to sue by civil liberties and journalist groups whom a lower court had forbidden to investigate the surveillance. A New York Times editorial said the three-judge decision “might lead to a significant and long overdue legal review of the government's warrantless wiretapping program.” The government, of course, denies that its surveillance program is illegal, or that Nacchio’s prosecution is anything but an attempt to bring him to justice for financial crimes. But just imagine the implications if the government actually did target Nacchio selectively, at least in part, because he was trying to protect customer privacy over networks that are fast-losing customer privacy with scant meaningful oversight?

A second notable feature about the Nacchio case involves the lessons that other defendants and other legal observers can glean from his experience with lawyers, which involved $25 million in bills for one firm alone. Our research at the Justice Integrity Project has repeatedly indicated that even those with large savings and vast, high-level executive experience sometimes become as helpless as anyone else when targeted by law enforcers who can draw on taxpayer-funded budgets and the inherent credibility they sustain from their public office.

More specifically, we see repeatedly that many sophisticated and wealthy defendants become desperately unhappy even with top-dollar defense attorneys with stellar reputations. This typically occurs because the attorneys exact huge fees and take control of the case strategies (sometimes over defendant recommendations). After courtroom reverses many times defendants come to believe that their attorneys have focused less on an all-out battle to win the case than on maintaining their institutional relationships with an eye to new clients.

We have seen this internal dissension on defendant teams many times although usually it never becomes public since the once-wealthy defendant is broke, imprisoned and has scant resources to undertake a fight with a law firm that is typically obligated under court rules to provide at least minimum services for clients even if the relationship becomes frayed. Our project has examined situations where defendants with such illustrious positions as police commissioner, law professor, financier, state attorney general or even governor have come to the sad conclusion that they didn’t pick the right lawyer even for the battle of their lives. In one recent hearing I attended, a client was shocked to see that his attorney (who was being paid more than $900 an hour) deliberately failed to make an argument in a financial case that the client wanted and that had been promised. And if people paying that kind of fee have trouble picking right lawyer the task is incomparably more difficult for the average litigant, especially in a criminal case with freedom, family, friends and finances usually all at risk versus the immense power and majesty of the federal government.

For such reasons, Nacchio’s suit this week charging negligence and overbilling by his illustrious defense attorney Herbert Stern provides a rare public drama about a system-wide problem. To recap from our report March 24, the essence of Nacchio's complaint is that Stern was negligent in failing to put on a strong defense. The allegation might seem hard to square with Stern's illustrious background, including his autobiography nearly 40 years ago, "Tiger in the Court." Not surprisingly, news headline writers focused on a more tangible element of Nacchio's complaint than negligence: That at least someone on Stern’s team thought it necessary to bill the defendant for the expense of new underwear while on travel.

The underwear-buyer doubtless thought the purchase trivial in the context of his firm’s $25 million bills to Nacchio, which included such arguably similar expenses as airport meals on business trips.  But Nacchio, 61, is a Brooklyn longshoreman’s son sweating out his 70-month term in a Pennsylvania correctional facility with his life ruined. And he clearly thought differently as he prepared his suit against Stern and the firm. So did the headline writers writing up the suit, as indicated below.

Stern failed to respond to my email request for his input. Any such response in court or otherwise would doubtless emphasize is stature as a former federal judge, U.S. attorney for New Jersey and other achievements that we listed at greater length in our March 24 report. Yet even achievements and renown can bring suspicions about motives, conflicts and political considerations. In reporting on the 2009 gubernatorial campaign of Republican candidate Chris Christie, the Associated Press reported that Christie as U.S. Attorney awarded seven, multi-million-dollar no-bid contracts to prominent political insiders to monitor legal compliance by organizations that might otherwise face prosecution for law-breaking. The AP reported Stern’s deal as follows:

-- Herbert Stern. Christie mentor got $10 million contract to monitor University of Medicine and Dentistry of New Jersey, accused of double-billing for services covered by Medicare. Christie close friend and fundraiser John Inglesino, a partner in Stern's law firm, was paid $325 per hour for his work as counsel on the monitorship. Stern, Inglesino, another partner and their wives later gave $23,800 in donations to Christie's campaign for governor. The donations were matched, 2-1, under New Jersey's campaign finance laws, bringing the total amount to $71,400.

Christie awarded former U.S. Attorney General John Ashcroft a no-bid contract valued at between $28 million and $52 million for similar work. Bolstered by the gratitude for such contracts and his reputation as a reformer frugal with taxpayer dollars, Christie went on to win gubernatorial race. Such initiatives have now further positioned him as a leader among Republicans for the party’s 2012 presidential nomination, according to one recent poll listed below. Yet a review of comparison the totality of fees to the Stern firm from both Christie and Nacchio underscores why sophisticated litigants know that top attorneys have many things on their minds as they seek and perform legal work.

In sum, many of these cases become more fascinating and important the deeper one probes – a process increasingly difficult for defendants, law enforcers, reporters, judges and voters alike because of time and political pressures. Stay tuned.


Listed below are selected articles on legal reform and political, security and media factors. The articles contain a sample of news. See the full article by visiting the Project home page's section on News Reports, and clicking the link.

Newark Star-Ledger / NJ.com, N.J. Gov. Christie tops list of Republicans in hypothetical race for presidential nomination, poll shows, Ginger Gibson, March 23, 2011. An online poll conducted by Zogby Interactive puts Gov. Chris Christie [portrayed in a Kiipedia photo] ahead of other Republicans in a hypothetical matchup for the 2012 presidential nomination. Christie, who has said repeatedly and emphatically that he is not running for president, received the most support, 19 percent, among Republicans asked about their preference for the nomination. Christie received 19 percent of the support, followed by former Alaska Gov. Sarah Palin who received 13 percent.

New York Times, Editorial: The Right to Sue Over Wiretapping, March 23, 2011. A court decision might lead to a significant, and long overdue, legal review of the government's warrantless wiretapping program.

PolitickerNJ.com, Herbert Stern sued for underwear purchase, Darryl R. Isherwood, March 23, 2011. Herbert Stern, the lawyer hired by then U.S. Attorney Chris Christie to monitor UMDNJ as part of a deferred prosecution agreement, has found himself at the wrong end of a lawsuit filed by a former client.

NJ.com/ Associated Press, Ex-Qwest CEO convicted of insider trading sues his lawyers, saying they billed him for underwear, in-room movies, March 23, 2011. The former chief executive officer of Qwest Communications today sued the lawyers who represented him in his insider-trading case, claiming they "grossly overbilled" him and sought payment for staff breakfasts, underwear and in-room movies.

Other News

Salon / Unclaimed Territory, Miranda is Obama's latest victim, Glenn Greenwald, March 24, 2011. One of the central pledges of Barack Obama's campaign was that -- as he put it early in his presidency -- the Bush administration had gone wildly wrong because it "established an ad hoc legal approach for fighting terrorism that was neither effective nor sustainable -- a framework that failed to rely on our legal traditions and time-tested institutions; that failed to use our values as a compass." Today, the Obama DOJ unveiled the latest -- and one of the most significant -- examples of its eagerness to assault the very legal values Obama vowed to protect. The Wall Street Journal reports that "new rules allow investigators to hold domestic-terror suspects longer than others without giving them a Miranda warning, significantly expanding exceptions to the instructions that have governed the handling of criminal suspects for more than four decades."

Reason Magazine, Bread and Circus. And Chickens. And Tanks, Radley Balko, March 23, 2011. Sometimes, a story comes along that defies commentary. Sheriff Joe Arpaio rolled out the tanks to take down a man suspected of cockfighting. West Valley residents in the neighborhood are crying foul after armored vehicles, including a tank, rolled into their neighborhood to make the bust.

Boston Phoenix, Chuck Turner is going to jail, but it's the Feds who should be hanging their heads in shame, Kyle Smeallie and Harvey Silverglate, March 23, 2011. In the corruption case of former Boston City Councilor Chuck Turner, dereliction of duty abounds. Neither federal law-enforcement authorities, nor the supposedly independent federal judiciary and news media, properly played the roles assigned to them in our constitutional system, which continues to suffer mightily under the weight of stings and set-ups that too often mask, rather than reveal, the truth.

Jersey City Independent, Pols Caught Up in ’09 Corruption Probe Will Wait as Feds Appeal Circuit Court’s Decision to Dismiss Charges, Ricardo Kaulessar, March 22, 2011. All five defendants in a New Jersey federal corruption probe will have to wait months as prosecutors pursue an “en banc” hearing of all 14 judges in the Third Circuit of Appeals system to see if they will reverse a three-judge appellate court ruling throwing out bribery charges in the case as erroneous under longstanding U.S. law because the defendants were candidates, not elected officials.

Biloxi-Gulf Port Sun-Herald, Feinberg’s law firm now earning $1.25 million a month, March 25, 2011. The law firm of attorney Ken Feinberg has received a 47.1 percent pay increase for administering individual and business claims filed over losses blamed on the BP oil catastrophe.  At the Sun Herald’s request, Ken Feinberg on Friday released an updated memorandum about BP’s compensation to his firm, Feinberg Rozen, for overseeing the Gulf Coast Claims Facility. Feinberg Rozen’s fee increased from $850,000 to $1.25 million a month Jan. 15, the memorandum says. The new rate is effective through the end of the year. GCCF is scheduled to end operations in August 2013.


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