FOR IMMEDIATE RELEASE THURSDAY, MARCH 27, 2008 WWW.USDOJ.GOV AG (202) 514-2007 TDD (202) 514-1888 "The investigation and prosecution of public corruption is among the highest obligations of law enforcement, and it should come as no surprise that I consider it to be one of the top priorities of the Department of Justice. In recent years, the Department's career prosecutors and criminal investigators have been engaged in a renewed effort to pursue corruption at all levels and all branches of government," said Attorney General Michael B. Mukasey.
At every level of government, the Justice Department is committed to enforcing the laws that protect the integrity of our government. Because of this commitment to the rule of law, ordinary citizens are able to rely on and expect the honesty and integrity of government officials and other holders of the public's trust.
Over the last seven years, the Department has enjoyed tremendous success rooting out corruption and holding public officials who misuse their office or misspend taxpayer dollars accountable for their actions.
From 2001 to 2006 (the most recent period for which data is available) the Department of Justice charged 6,899 individuals with public corruption offenses nationwide and obtained 5,876 convictions. An overview of the Department's recent activities in this area includes the following: The Criminal Division's Public Integrity Section * The Criminal Division's Public Integrity Section was created in 1976 to consolidate into one unit the Justice Department's responsibilities for the prosecution of criminal abuses of the public trust by government officials.
* The number of defendants charged by the Public Integrity Section in the six-year period from 2001 to 2006 increased by 52 percent over the eight year period from 1993 to 2000, and the number of convictions increased by 31 percent over the same period.
* From 2001 through 2006, the Public Integrity Section charged 365 individuals with public corruption offenses and obtained 332 convictions. The year-by-year breakdown is as follows: | Year | Defendants Charged | Defendants Convicted/Pleaded Guilty | | 2001 | 57 | 36 | | 2002 | 37 | 45 | | 2003 | 85 | 61 | | 2004 | 48 | 43 | | 2005 | 95 * | 84 | | 2006 | 43 | 63 | | TOTAL | 365 | 332 | | PER YEAR AVG. | 60.83 | 55.33 | * From 1993 to 2000, the Public Integrity Section charged 240 defendants and obtained 253 convictions. The year-by-year breakdown for that time period is as follows: | Year | Defendants Charged | Defendants Convicted/Pleaded Guilty | | 1993 | 27 | 37 | | 1994 | 38 | 33 | | 1995 | 20 | 31 | | 1996 | 34 | 39 | | 1997 | 35 | 29 | | 1998 | 26 | 33 | | 1999 | 28 | 21 | | 2000 | 32 | 30 | | TOTAL | 240 | 253 | | PER YEAR AVG. | 30 | 31.63 | * The Public Integrity Section works closely with dedicated and specially trained agents at the FBI to investigate and prosecute public corruption at all levels of government. The FBI currently has 642 special agents dedicated to public corruption matters, up from 358 in 2002.
* The Department's renewed commitment to the investigation and prosecution of public corruption is reflected not so much by an increased case load - though the Department has, in fact, brought more public corruption cases in recent years - but rather by the quality, complexity and profile of the cases we have successfully pursued.
The U.S. Attorneys' Offices: * The available numbers for prosecutions of public corruption by U.S. Attorneys offices nationwide also demonstrate the Department's commitment to bringing these cases. From 2001 to 2006, the Department charged a total of 6,899 individuals with public corruption and obtained 5,876 convictions*: | Year | Defendants Charged | Defendants Convicted/Pleaded Guilty | | 2001 | 1,087 | 920 | | 2002 | 1,136 | 1,011 | | 2003 | 1,150 | 868 | | 2004 | 1,213 | 1,020 | | 2005 | 1,163 | 1,027 | | 2006 | 1,150 | 1,030 | | TOTAL | 6,899 | 5,876 | | PER YEAR AVG. | 1,149 | 979 | * By way of comparison, in the six-year period from 1995 to 2000, the Department charged 6,400 individuals with public corruption offenses and obtained 5,650 public corruption convictions.
| Year | Defendants Charged | Defendants Convicted/Pleaded Guilty | | 1995 | 1,051 | 878 | | 1996 | 984 | 902 | | 1997 | 1,057 | 853 | | 1998 | 1,174 | 1,014 | | 1999 | 1,134 | 1,065 | | 2000 | 1,000 | 938 | | TOTAL | 6,400 | 5,650 | | PER YEAR AVG. | 1,066 | 941 | RECENT DEVELOPMENTS AND ONGOING EFFORTS - DOMESTIC Congressional Cases: * In February 2008, the Department indicted Arizona Congressman Rick Renzi and two of his business associates on 27 counts of honest services wire fraud, extortion, money laundering, and conspiracies to engage in these acts.
* In June 2007, the Department indicted Louisiana Congressman William Jefferson on public corruption counts, including conspiracy, bribery, honest services fraud, RICO, the Foreign Corrupt Practices Act (FCPA) and obstruction of justice. Rep. Jefferson is the first U.S. government official to be charged with violations of the FCPA.
* Former California Congressman Randall Cunningham pleaded guilty to bribery and was sentenced in March 2006 to more than eight years in prison.
* In February 2008, Defense contractor Brent Wilkes was sentenced to 12 years in prison for funneling cash, mortgage payments, cars, meals, luxury travel and prostitutes to former Congressman Cunningham in return for the Congressman's assistance in steering contracts to Wilkes' company.
* Defense contractor Mitchell Wade pleaded guilty to bribery, conspiring to deprive the Defense Department of the honest services of its employees and election fraud. Wade admitted to making more than $1 million in illegal payments to Congressman Cunningham, providing illegal benefits to Defense Department employees and attempting to curry favor with two other members of Congress by making illegal campaign contributions.
The ongoing Abramoff investigation is being conducted by the Public Integrity and Fraud Sections of the Criminal Division and has netted 12 convictions thus far, including the following: ** Former lobbyist Jack Abramoff pleaded guilty in January 2006 to conspiracy, honest services fraud and tax evasion.
** Mark D. Zachares, a former high-ranking aide to the U.S. House of Representatives Transportation & Infrastructure Committee, pleaded guilty in April 2007 to a one-count indictment charging him with conspiracy to commit honest services wire fraud.
** Ohio Congressman Robert Ney pleaded guilty in September 2006 to conspiracy to commit multiple offenses B including honest services fraud, making false statements violations of his former chief of staff's one-year lobbying ban B and to making false statements to the U.S. House of Representatives. Ney was sentenced to 30 months in prison.
** Former lobbyist Michael Scanlon pleaded guilty in November 2005 to conspiracy to commit bribery and honest services fraud.
** Former lobbyist Neil Volz pleaded guilty in May 2006 to honest services fraud and violating the one-year lobbying ban. Volz was sentenced in September 2007 to two years probation and ordered to pay a $2,000 fine. Volz received a reduced sentence based on his substantial assistance to the government's investigation.
** Former lobbyist Tony C. Rudy pleaded guilty in March 2006 to conspiring with Jack Abramoff, Michael Scanlon and others to commit honest services fraud, mail and wire fraud, and a violation of conflict of interest post-employment restrictions.
** William Heaton, former chief of staff for Ohio Congressman Robert Ney, pleaded guilty to conspiracy to commit honest services wire fraud on Feb. 26, 2007.
** On June 8, 2007, Italia Federici, president of the Council of Republicans for Environmental Advocacy, pleaded guilty to tax evasion and obstruction of the U.S. Senate's investigation into the Abramoff scandal.
** On Dec. 15, 2005, Adam Kidan pleaded guilty at federal court in Miami to conspiracy to commit wire fraud and mail fraud. Kidan, a former business partner of Abramoff's, was sentenced in March 2006 to nearly six years in prison.
Executive Branch Cases: * In connection with the Abramoff investigation, the Department of Justice has obtained convictions of the following executive branch officials: ** In March 2007, James Steven Griles, former Deputy Secretary of the Department of the Interior, pleaded guilty to obstructing the U.S. Senate's investigation into corruption allegations surrounding Jack Abramoff. Griles was sentenced to 10 months in prison in June 2007.
** David Safavian, former Chief of Staff to the Administrator of the GSA was convicted by a jury in June 2006 of submitting false statements to an ethics official, Inspector General agents and a Senate committee, and of obstructing the Inspector General's investigation. Safavian was sentenced to 18 months in prison.
** Department of the Interior employee Roger G. Stillwell pleaded guilty in June 2006 to falsely certifying his executive branch confidential financial disclosure report and was sentenced to six months of probation.
* On Feb. 28, 2008, Jeffrey H. Stayton, the former Chief of the Aviation Division for the U.S. Army Test and Evaluation Command (ATEC), was sentenced to 63 months imprisonment following his conviction on charges arising from participation in an honest services wire fraud scheme and a related obstruction of justice. As an ATEC official, Stayton took actions that favored the selection of co-defendant William C. Childree's company, Maverick Aviation, Inc., for a contract worth approximately $4.7 million and misled government officials about Maverick's performance under the contract.
* In March 2007, Kenneth Harvey, the former Chief of the Acquisition Logistics and Field Support Branch within the Army's Intelligence and Security Command (INSCOM), was sentenced to 72 months in prison for accepting more than $40,000 in bribes from a defense contractor.
* In February 2007, Steven Merkes, a former Department of Defense employee, pleaded guilty to accepting illegal gratuities B including $24,000 in cash and a job offer B in return for official acts while working as an operational support planner in the Future Operations Division of the U.S. Army Headquarters, Special Operations Command-Europe.
Significant State and Local Convictions: * There has been a commensurate increase in the quality, complexity and profile of the cases being brought.
* To date, there have been seven criminal convictions arising out of the ongoing investigation into public corruption in the State of Alaska.
** James Clark, chief of staff to the former governor of Alaska, pleaded guilty in February 2008 to conspiracy to commit honest services mail and wire fraud, and is awaiting sentencing.
** In December 2007, Peter Kott, a former Speaker of the Alaska House of Representatives, was sentenced to six years in prison following his October 2007 conviction for extortion, bribery and conspiracy.
** In October 2007 Thomas T. Anderson, a former elected member of the Alaska House of Representatives, was sentenced to five years in prison following his conviction on seven counts of extortion, conspiracy, bribery and money laundering.
** Victor H. Kohring, a former elected member of the Alaska House of Representatives, was convicted at trial in November 2007 for attempted extortion, bribery and conspiracy, and is awaiting sentencing.
** Additionally, three private individuals B Bill J. Allen, Richard L. Smith and former Anchorage lobbyist William Bobrick B have pleaded guilty to felony public corruption. Allen and Smith, former VECO Corporation executives, provided illegal financial benefits to multiple Alaska elected officials in exchange for those officials' support on legislation pending before the Alaska State Legislature.
* On Feb. 27, 2008, in the District of the Virgin Islands, a jury convicted Dean C. Plaskett, a Commissioner of the Virgin Islands Department of Planning and Natural Resources, and Marc A. Biggs, a Commissioner of the Department of Property and Procurement, of demanding and accepting bribes. Plaskett also was convicted of obstructing justice. The defendants accepted bribes and kickbacks in exchange for awarding approximately $1.4 million in government contracts and authorizing more than $1 million in progress payments to contractors who did little or no work. To date, five other high level Virgin Islands officials and a businessman from Georgia have been convicted for their roles in this bribery and kickback scheme.
* Former Governor of Illinois George Ryan, was convicted by a jury in April 2006 on numerous charges including racketeering and honest services fraud. Ryan was sentenced to 78 months in prison. The conviction was affirmed by the Seventh Circuit in August 2007.
* Former Governor of Alabama Don Siegelman and former HealthSouth CEO Richard Scrushy, were convicted by a jury in June 2006 of conspiracy, bribery and mail fraud. Seigelman was sentenced in June 2007 to serve 88 months in prison and ordered to pay a $50,000 fine. Also in June 2007, Scrushy was sentenced to 82 months in prison and ordered to pay a $150,000 fine. Both men are appealing their convictions.
* Former Mayor of Atlanta Bill Campbell, was convicted by a jury in March 2006 on tax evasion charges. He was sentenced to 30 months in prison in June 2006.
* Former Secretary General Marcos Morell-Corrada and gubernatorial campaign manager Rene Vazquez-Botet of the New Progressive Party in Puerto Rico were convicted of conspiracy, extortion and tax fraud by a jury in November 2006 and sentenced to 60 months in prison.
Election Fraud: * In 2002, the Attorney General established a Ballot Access and Voting Integrity Initiative to spearhead the Department's efforts to combat election fraud and civil rights violations involving voting. To further these goals, the initiative requires annual training of federal prosecutors in the areas of voter fraud and voting rights.
* Since the initiative began, the Department of Justice has charged 148 persons with voter fraud and convicted 102 defendants.
* Non-citizens have been convicted of voting-related offenses in Florida, Colorado, North Carolina and Oregon.
* Vote buying schemes have been successfully prosecuted in Illinois, Kentucky and North Carolina, and persons have been convicted for multiple voting in Kansas and South Dakota.
RECENT DEVELOPMENTS AND ONGOING EFFORTS - INTERNATIONAL Iraqi Reconstruction: * The Department has established a unified and coordinated approach for prosecuting procurement fraud cases associated with Iraqi reconstruction efforts, forming the National Procurement Fraud Task Force, which uses the resources of the Antitrust Division and the Criminal Division (particularly the Public Integrity Section, the Fraud Section, the Office of International Affairs and the Asset Forfeiture and Money Laundering Section) and the U.S. Attorneys' offices.
* Among other things, this task force focuses on combating procurement fraud associated with government spending on the war in Iraq. To date, 46 individuals and companies have been charged with contract fraud related to the global war on terror.
* This effort is producing significant results: ** On Jan. 25, 2008, Wallace Ward, a fuel technician employed by the company KBR, pleaded guilty to conspiracy to defraud and accept bribes in connection with a scheme to divert to the black market in Afghanistan more than $2 million in fuel intended for Bagram Airfield. On Feb. 7, 2008, James Sellman, another KBR fuel technician participating in the conspiracy, pleaded guilty to the same offense.
** On Jan. 23, 2008, Elie Samir Chidiac and Raman International Inc. were indicted on charges of conspiring to bribe a military contracting officer in Iraq. Chidiac is also charged with participating in a scheme with a co-conspirator military officer to alter contracting documents to allow Chidiac to fraudulently obtain payment for work not performed, which he then split with the officer. A preliminary audit indicates the contracting officer received more than $400,000 from Chidiac. Trial is scheduled for June 9, 2008.
** On Nov. 20, 2007, Terry Hall, a civilian contractor, was indicted by a federal grand jury in the District of Columbia for allegedly soliciting bribes while working at Camp Arifjan, an Army base in Kuwait. The indictment charges that Hall's companies received more than $20 million worth of military contracts for providing, among other things, bottled water to the U.S. military in Kuwait.
** On Nov.14, 2007, Chevron Corporation and its subsidiaries agreed to pay $30 million in a settlement with the Southern District of New York, having admitted to obtaining Iraqi oil under the U.N. Oil for Food Program from third parties that paid secret, illegal surcharges to the former government of Iraq.
** On Aug. 22, 2007, U.S. Army Major John Cockerham, his wife Melissa Cockerham, and Cockerham's sister, Carolyn Blake, were indicted in federal court in San Antonio on charges of bribery, money laundering and conspiracy. All three defendants accepted millions of dollars in bribe payments on Major Cockerham's behalf, in return for his awarding contracts to corrupt contractors. Cash bribes paid to the defendants totaled approximately $9.6 million.
** In July 2007, John Allen Rivard, a former major in the U.S. Army Reserve, pleaded guilty to conspiracy, bribery and money laundering in connection with his accepting bribes for his fraudulent awarding and administration of U.S. government contracts in Balad, Iraq. Rivard admitted to receiving more than $220,000 in bribe payments, as well as to laundering illegal proceeds. On Oct. 19, 2007, Rivard was sentenced to 120 months in prison and three years of supervised release.
** On Feb. 7, 2007, U.S. Army Col. Curtis G. Whiteford, U.S. Army Lt. Cols. Debra M. Harrison and Michael B. Wheeler, and civilians Michael Morris and William Driver were indicted for various crimes related to a scheme to defraud the CPA - South Central Region in al-Hillah, Iraq. The charges include conspiracy, bribery, money laundering, interstate transportation of stolen property, bulk cash smuggling, tax fraud, and firearms violations.
FCPA Enforcement * One of the Department's most potent weapons in combating foreign corruption is the FCPA. Since 2001, the Department has substantially increased its focus on FCPA violations. In 2007, the Department brought 16 enforcement actions, compared to four in 2002. While enforcement actions against corporations have increased, so too have prosecutions of individuals. In 2007, eight individual defendants either were indicted or pleaded guilty. Three important FCPA prosecutions brought in 2007 were the cases against Baker Hughes, Congressman William Jefferson and Vetco International.
** On Apr. 26, 2007, Baker Hughes Services International Inc. entered into a deferred prosecution agreement and its subsidiary, Baker Hughes Incorporated, pleaded guilty to violating the FCPA, conspiracy to violate the FCPA, and aiding and abetting the falsification of the books and records of its parent company Baker Hughes. As part of the agreements, BHSI agreed to an $11 million fine which, when considered in conjunction with penalties and disgorgement of profits imposed by the Securities and Exchange Commission, constitutes the largest collective penalty ever imposed in an FCPA case, a total of $44 million.
** On Feb. 6, 2007, three subsidiaries of Vetco International Ltd. pleaded guilty, and a fourth subsidiary entered into a deferred prosecution agreement, in connection with violations of the anti-bribery provisions of the FCPA that involved making approximately $2.1 million in corrupt payments to Nigerian government officials over a two-year period. As part of the plea and deferred prosecution agreements, the three subsidiaries paid a total of $26 million in criminal fines, the largest criminal fine to-date in an FCPA prosecution.
* In addition to charges brought under the FCPA anti-bribery provisions more than $24 million in penalties have been levied by the Department in cases involving suppliers of humanitarian goods under the U.N. Oil for Food program. Because these cases have, thus far, involved payments to the government of Iraq as opposed to an individual Iraqi official, FCPA bribery charges have not been brought. Instead, cases have included charges of wire fraud and violations of the books and records provisions of the FCPA. The two most recent enforcement actions concerning the U.N. Oil for Food Program were against AB Volvo and Flowserve Corporation: ** On Mar. 20, 2008, AB Volvo agreed to pay a $7 million penalty as part of an agreement with the Department regarding charges brought against AB Volvo subsidiaries Renault Trucks and Volvo Construction Equipment AB (VCE) for separate conspiracies to commit wire fraud and to violate the books and records provisions of the FCPA. Employees and agents of Renault Trucks paid a total of approximately $5 million in kickbacks to the Iraqi government for a total of approximately 61 million euros worth of contracts with various Iraqi ministries. Volvo Construction Equipment International AB the predecessor to VCE, and its distributors were awarded a total of approximately $13.8 million worth of contracts in return for approximately $1.3 million in kickbacks.
** Flowserve Corporation entered into a three-year deferred prosecution agreement and agreed to pay a $4 million penalty resulting from kickbacks paid to the Iraqi government by employees and agents of its subsidiary, Flowserve Pompes SAS, to obtain contracts with Iraqi ministries for the sale of large-scale water pumps and spare parts for use in Iraqi oil refineries.
* The numbers for 2005 were skewed as a result of Operation Lively Green, a large-scale undercover investigation into bribery and extortion by military personnel and law enforcement officials along the southwest border.
* These numbers reflect data that is compiled from annual nationwide surveys of the United States Attorneys' Offices by the Public Integrity Section. 08-246
Source: US Department of Justice
