Wednesday, January 14, 2009

Today in Plea Bargaining History - The Andrew Fastow Guilty Plea

Five years ago today, Andrew Fastow pleaded guilty to participation in crimes that contributed to the collapse of Enron. In his plea, Fastow admitted to disguising Enron's deteriorating financial health and engaging in a scheme to defraud the company of millions of dollars for his own benefit. Fastow also entered into an agreement to surrender more than $23 million to the SEC to settle related civil charges.

Fastow's plea agreement was the beginning of the end for the Enron conspirators. On January 22, 2004, Richard Causey, former Enron Chief Accounting Officer, was charged with being "a principal architect" of a scheme to mislead investors. On February 19, Jeff Skilling, former Enron CEO, was indicted on 35 counts of fraud, insider trading, and conspiracy. Finally, on July 18, Ken Lay, Enron founder and former CEO, was indicted on eleven counts of conspiracy, making misleading statements, wire fraud, bank fraud, and securities fraud.

In early 2005, Causey pleaded guilty and agreed to testify against Skilling and Lay. The trial began on January 30, 2006, and both Skilling and Lay were convicted on May 25.

Lay died prior to sentencing. Skilling was sentenced to 24 years and four months in prison. Recently, Skilling was ordered resentenced by the United States Court of Appeals for the Fifth Circuit due to a sentencing guidelines calculation error. Skilling is awaiting word on his new sentence, which some predict could include a more than modest reduction.

While Fastow's plea agreement called for Fastow to serve ten years in prison, his cooperation during the subsequent investigation and prosecutions was so extensive that he was eventually sentenced to only six years. He is serving his time at a federal facility in Colorado and is scheduled for release in 2011.

Monday, January 5, 2009

Remembering Judge Griffin B. Bell - Carter's Attorney General and Creator of the Special Matters Team at King & Spalding LLP

It is with great sadness that we learned today of the death of Griffin B. Bell, an individual aptly named by the New York Times as the “dean of Georgia lawyers.” Judge Bell’s influence in the law extends well beyond Georgia of course. In particular, his reputation of strong principles and independence led him to be a popular choice for internal investigations and an attorney who shaped this ever growing area of the law. As the New York Times noted today, his reputation was such that he established a Special Matters practice at King & Spalding to handle such assignments.

It is as a member of the King & Spalding Special Matters Team that I was able to meet Judge Bell and, during my final year with the firm, even had the pleasure of having an office just down the hallway from the former Attorney General. I will remember most his Southern style and his gift for quickly boiling down complex issues to the core. He was always a provider of thoughtful guidance, and he will be missed.

The New York Times has a well written obituary for Judge Bell, which is below.

Griffin B. Bell, the dean of Georgia lawyers and the United States Attorney General during most of the presidency of his childhood neighbor Jimmy Carter, died at Piedmont Hospital in Atlanta on Monday morning. He was 90.

A spokesman for King & Spalding, the law firm where he was senior counsel, said the cause of death was complications from pancreatic cancer.

Judge Bell, as he was almost always addressed long after his 15 years' service on the Federal bench, embodied more than a few of the clich├ęs about Southern gentlemen of the law, with his small-town background, a manner that was often called courtly, self-deprecating humor, a gift for persuasion and an instinct for politics.

But he was also known for strong principles and an independent streak, a reputation that made him a popular choice for blue-ribbon commissions and high-profile investigations of corporate malfeasance – to the point that he established a whole "special matters" practice at his law firm to handle such assignments.

Though a politically active Democrat nearly all his life, he often stood apart from many in his party in Georgia, whether by opposing racial segregation in the 1950's or by acting as President George H.W. Bush's personal counsel during the Iran-Contra investigations in the early 1990's.

He was equally independent as Attorney General, insisting on direct access to President Carter that no other cabinet officer enjoyed, and sticking tenaciously to policy decisions that he thought were grounded in fundamental tenets of the law, even when those decisions embarrassed or discomfited the president.

President Carter issued a statement on Monday saying he was "deeply saddened" by the death of his longtime friend, whom he called a "trusted and enduring public figure."

Born on Halloween, 1918, in the west central Georgia town of Americus, Griffin Boyette Bell was the third child and only son of a farmer from a locally prominent family who later turned to shopkeeping. With several lawyers in his extended family, including a cousin who became the state's chief justice, Mr. Bell found himself drawn in childhood to a legal career, and he often attended local court sessions with his father.

After army service in World War II, he attended college on the G.I. Bill, received a law degree from Mercer College and established a successful practice in Savannah and Rome, Ga., before being invited to become a partner in King & Spalding, an elite Atlanta firm, in 1953. He remained associated with the firm for the rest of his life.

By 1958 he was managing partner, as well as a key adviser to newly elected Gov. Ernest Vandiver, who had promised in his campaign not to desegregate Georgia's schools, but who did not want to shut them down to avoid federal court-ordered integration. Mr. Bell, who opposed segregation, helped Governor Vandiver finesse the problem for a time, by persuading the legislature to set up a commission to hold hearings around the state on whether the schools should close.

Mr. Bell's political star ascended farther when he co-managed John F. Kennedy's campaign in Georgia and delivered a bigger majority even than Massachusetts did. Kennedy rewarded him in 1961 with a seat on the United States Court of Appeals for the Fifth Circuit, which in those days covered the whole Southeast.Civil rights cases figured heavily on the court's docket in the 1960s, and Judge Bell was handed a momentous one after just two months on the bench. In it, a panel that he led ruled that Georgia's longstanding "county unit system" of primary voting unconstitutionally denied fair representation to the state's growing cities, with their large concentrations of black voters. The decision broke the grip of white rural party barons on the state's politics.

As a judge, he was regarded as a good administrator more than a legal theorist; a strong defender of the First Amendment; opposed to segregation and discrimination but also to racial quotas; and very conservative on the rights of criminals.

Judge Bell resigned in 1976 to return to private practice at King & Spalding, saying he wanted "to make some money." But in less than a year, public service beckoned again: Jimmy Carter, whose family farm in Plains, Ga., is nine miles from Judge Bell's childhood home, offered him the top job at the Justice Department, an appointment he was initially reluctant to accept. His Georgia roots and his work for Governor Vandiver made him the most controversial of President Carter's cabinet choices, but a number of black leaders in Georgia spoke out in favor of his confirmation.

As Attorney General he concentrated on repairing the lingering damage from the Watergate scandal, and on de-politicizing and re-professionalizing the Justice Department and the F.B.I.

After stepping down in 1979 to return once again to King & Spalding, Judge Bell's notable legal work included representing Eugene Hasenfus, whose capture by Nicaraguan authorities exposed the Iran-Contra scandal. Judge Bell was hired by the E.F. Hutton brokerage firm to investigate a check-kiting scandal at the firm, and helped Dow Corning defend itself against litigation over its silicone breast implants. He published a memoir and other writings about legal issues, spoke out in favor of term limits for elective office, proposed limiting the president to a single six-year term, and was the subject of a biography by Reg Murphy, the former editor of the Atlanta Constitution.

Judge Bell's wife of 57 years, the former Mary Foy Powell, died in 2000. He remarried the following year, to a lifelong friend, Nancy Duckworth Kinnebrew. She survives him, as do his son by his first marriage, Griffin Bell Jr., a labor lawyer who lives in Atlanta; two grandchildren, including Griffin Bell III, also a lawyer, and five great-grandchildren.

Though he gave up the senior partner title at King & Spalding at the end of 2003 as a concession to advancing age, he kept working, and kept being named to blue-ribbon panels, including a commission to review the controversial "data mining" of personal information about millions of citizens by the Defense Department and other agencies. The commission issued a report in 2004 calling for greater privacy safeguards.

Number of Corporate Settlements with the DOJ Spikes

According to the Washington Post, the DOJ has reached more than a dozen business-related settlements since November.

The climate for business settlements could grow more harsh when Obama appointees seize the reins at the Justice Department, corporate lawyers say. They point to statements by Attorney General-designate Eric H. Holder Jr., who told an audience last month that he would expand the focus of federal prosecutors into corporate suites.

A review of 15 agreements involving corporations since early November suggests that much of the alleged misconduct dates back five years or more, provoking questions about why the cases took so long to mature and why resolutions are coming with only weeks left in President Bush's term. . .

Justice Department officials said there is nothing unusual about end-of-year settlements. They defend their record in investigating and prosecuting corporate misdeeds. In recent weeks, they announced indictments against five Blackwater Worldwide security guards for their role in a 2007 ambush that killed or injured 34 Iraqi civilians. Justice Department officials also rolled out their second-largest price-fixing settlement, a $585 million penalty shared by three companies that make high-tech liquid crystal display panels for computer monitors, televisions and cellphones. . .

Since November, the Justice Department has announced 19 settlements or plea deals with companies, compared with 16 in the same time frame the year before. In 2006, department officials announced five business settlements in the same time frame.

Three lawyers who routinely represent companies before the Justice Department said they began to take notice shortly after the Nov. 4 election, when authorities announced a $725,000 environmental deal with Plantation Pipe Line. The number of settlements and plea agreements accelerated from there.

By mid-November, Britain's Aibel Group agreed to pay $4.2 million to resolve accusations that the oil and gas services company had flouted a probation agreement signed a year earlier, covering bribes its executives allegedly spread to Nigerian customs officials between 2002 and 2005.

A few weeks later came a case that authorities described as "unprecedented in scale and geographic reach." Siemens committed to pay $450 million in criminal fines, in a pact that left the German conglomerate eligible to bid for and win lucrative U.S.
government contracts.

Two days before Christmas, Justice Department officials rolled out more settlements: a $1.7 million deal with Spartan Motors, which allegedly paid kickbacks to win a contract to make chassis for military vehicles; a $6.1 million deal with a subsidiary of Exxon Mobil, accused of violating the Clean Water Act in connection with a 15,000-gallon diesel oil spill in Massachusetts; and a $7.6 million pact with Yale University to settle charges that it overbilled federal agencies on research grants between 2000 and 2006.

Corporate lawyers and public interest groups pointed to several other reasons contributing to the burst in settlements, including a desire by businesses to avoid negative publicity by timing their deals to the holiday season, and a push by government attorneys to complete big cases before they leave for private-sector
work. . .