August 12, 2015
Former National Geospatial-Intelligence Agency Official Pleads Guilty to Making False Statements
A former National Geospatial-Intelligence Agency (NGA) official pleaded guilty to making false statements to federal investigators regarding his financial interest in a private company.
Brian P. Hearing, 43, of Falls Church, Virginia, pleaded guilty before U.S. District Judge T. S. Ellis III of the Eastern District of Virginia to making material false statements to federal investigators. Among other things, Hearing admitted to falsely claiming that another individual was the only founder of the company and to denying having any legal or financial connections to the company when, in fact, he co-founded the company and shared equal ownership of it.
To read the full arcticle, click here.
July 10, 2015
Bob McDonnell loses appeal over public corruption convictions
The Washington Post reports:
A federal appeals panel court on Thursday unanimously affirmed the public corruption convictions against former Virginia governor Robert F. McDonnell, writing in an 89-page opinion that the onetime Republican rising star "received a fair trial and was duly convicted by a jury of his fellow Virginians."
The decision, authored by judge Stephanie D. Thacker and joined by judges Robert B. King and Diana Gribbon Motz, brings to a close another important chapter in the saga that has gripped Richmond and the nation.
May 12, 2015
Appeals Court Hears Arguments in Ex-Gov. McDonnell's Case
Former Virginia Gov. Bob McDonnell's fate is in the hands of three federal appeals court judges. A panel of the 4th U.S. Circuit Court of Appeals heard arguments in McDonnell's public corruption case Tuesday. The court usually takes a few weeks to rule.
McDonnell and his wife, Maureen, were convicted of taking more than $165,000 in gifts and loans from a wealthy businessman in exchange for promoting his company's dietary supplements. The former governor was sentenced to two years in prison, his wife to one year and one day.
Tuesday's arguments focused on two major issues - whether McDonnell was convicted based on an overly broad definition of what constitutes an "official act'' and whether jurors were properly questioned about whether they were influenced by news reports about the case.
US approved most Bill Clinton speech requests within days
The AP reports:
U.S. State Department officials under Secretary of State Hillary Rodham Clinton moved quickly when aides to Bill Clinton asked them in March 2010 to approve plans for the former president to address clients of a British bank under investigation for violating international sanctions. Within four days, the department's ethics office signed off on the request — as it did for hundreds of others from the former president during his wife's four-year tenure leading the agency....
The State Department's scrutiny, which went beyond the standard ethics requirements for all federal officials, was a voluntary process agreed to by both Clintons to avoid "even the appearance of a conflict of interest," according to a January 2009 memo sent by David Kendall, Bill Clinton's personal lawyer, to Jim Thessin, who oversaw the vetting in the State Department. Clinton's office agreed to provide the names of organizations hosting the former president at least 14 days before the event, according to the memo. Lawyers at the agency would then aim to complete their review within five days. Only a handful of proposed arrangements appear to have been rejected. A consulting contract with Saban Capital Group Inc., a firm headed by major Clinton donor Haim Saban, was rejected because of what the State Department deemed as Saban's active involvement in foreign affairs, particularly the Middle East.
February 11, 2015
Three admirals censured in Navy corruption investigation
The Navy announced Tuesday it censured three admirals in connection with a fraud and bribery investigation that has already led to convictions of three other Navy officers.
Rear Admirals Michael Miller, Terry Kraft and David Pimpo were censured by the Secretary of the Navy on Tuesday after an investigation found that they "improperly accepted gifts from a prohibited source" from 2006 to 2007. All three officers have now submitted retirement requests.
The investigation also revealed that two of the officers had "improperly endorsed a commercial business" and one solicited "gifts and services" from an unauthorized source, according to a Navy press release. All are violations of U.S. Navy ethics regulations.
"All Navy officers, particularly our senior leadership in positions of unique trust and responsibility, must uphold and be held to the highest standards of personal and professional behavior," Secretary of the Navy Ray Mabus said in a statement. "These three officers, whose actions were revealed during the GDMA investigation demonstrated poor judgment and a failure of leadership in prior tours."
The investigation revolves around a corruption case involving several Navy officers and defense contractor Glenn Defense Marine Asia, referred to as GDMA in the investigation.
Three other Navy officers pled guilty to federal charges in the corruption case involving Glenn Defense Marine Asia and its head, Malaysian national Leonard Glenn Francis. A fourth Navy officer, Commander Michael Vannak Khem Misiewicz has pleaded not guilty to federal charges in the bribery case. The officers allegedly traded classified information in exchange for luxury travel and and hotel stays as well as prostitution services.
January 23, 2015
Sheldon Silver, New York Assembly Speaker, Faces Arrest on Corruption Charges
The New York Times reports:
Federal authorities are expected to arrest Sheldon Silver, the powerful speaker of the New York State Assembly, on corruption charges on Thursday, people with knowledge of the matter said. The case is likely to throw Albany into disarray at the beginning of a new session.
The investigation that led to the expected charges against Mr. Silver, a Democrat from the Lower East Side of Manhattan who has served as speaker for more than two decades, began after Gov. Andrew M. Cuomo in March abruptly shut down an anticorruption commission he had created in 2013.
Details of the specific charges to be brought against Mr. Silver were unclear on Wednesday night, but one of the people with knowledge of the matter said they stemmed from payments that Mr. Silver received from a small law firm that specializes in seeking reductions of New York City real estate taxes. The total amount of the payments was unclear, but another person has said they were substantial and were made over several years.
Mr. Silver failed to list the payments from the firm, Goldberg & Iryami, on his annual financial disclosure filings with the state, as required.
November 24, 2014
Audit: IRS not doing enough to prevent conflicts of interest
The Washington Post reports: Dozens of Internal Revenue Service employees have earned money preparing tax filings since 2009 in violation of agency policy, and one pleaded guilty last year to illegally accessing taxpayer data to conduct a private business, according to federal auditors.
The Treasury Inspector General for Tax Administration issued those findings as part of a report this week on how well the IRS is detecting and preventing conflicts of interest within its workforce.
IRS personnel are not generally barred from outside work, but they need special approval to ensure that their actions with the agency would not benefit them personally. The audit found that only about half of the 6,000 IRS staffers who held other jobs in 2011 had obtained the required authorization.
October 01, 2014
Ex-GSA Executive Jeff Neely Indicted for Fraud
Jeff Neely, the General Services Administration executive viewed as the ringleader of the lavish spending on a 2010 training conference in Las Vegas, was indicted on five counts of fraud on Thursday by a federal grand jury in San Francisco.
The 59-year-old former head of region nine of the Public Building Service faces charges of making fraudulent reimbursement claims and false statements, according to an announcement from United States Attorney Melinda Haag of Northern California and GSA Office of Inspector General Special Agent in Charge David House.
Neely is “alleged to have fraudulently sought reimbursement for personal travel and expenses—incurred in Las Vegas, Nev.; Long Beach, Calif.; Guam; and Saipan—by submitting false and fraudulent claims to the United States,” the announcement said. “The indictment further alleges that, when GSA employees questioned him about these expenses, Neely falsely represented that the costs were incurred for official government business.”
If convicted, he faces a maximum sentence of five years imprisonment, and a fine of $250,000 for each violation.
January 02, 2014
Ethics Reform in Local Government
In an effort to bring more sunshine to the Old Dominion, state Del. Rob Krupicka has crafted legislation that would limit the amounts of gifts local and state officials could accept and require regular disclosure in a searchable, online database. It's part of what Krupicka expects to be a larger, bi-partisan move toward ethics reform in Virginia sparked in no small part by the Star Scientific scandal involving outgoing Gov. Bob McDonnell.
Krupicka's bill would require lawmakers and local elected officials, along with state and local government officers and employees, to electronically file a monthly gifts reports and quarterly economic interest reports. The reports would be available to the public online in a searchable online database maintained by the Secretary of the Commonwealth's Office.
Further, the legislation would prevent any state or local officer or employee from accepting a single gift worth more than $100 or a combination of gifts with a total value of more than $500 from a single donor within a single filing period.
October 25, 2013
Former USAID Senior Official to Pay Civil Penalty for Alleged Conflict of Interest Violation
David Ostermeyer, who retired from the U.S. Agency for International Development (USAID) in 2012, will pay the government a $30,000 penalty to settle allegations that he participated in a matter in which he had a financial interest that conflicted with his duties when he was Chief Financial Officer of the agency, the Justice Department announced today.
“We expect government officials to earn and maintain the trust of taxpayers by acting with the highest integrity,” said Stuart F. Delery, Assistant Attorney General for the Civil Division. “This requires, at a minimum, that they do their work free of prohibited conflicts of interest. The Justice Department will pursue those who violate their ethical obligations.”
The government alleged that shortly before Ostermeyer retired from USAID, he helped the agency draft a contract solicitation for a senior advisor – a position that Ostermeyer intended to apply for after he retired. In an effort to ensure he would be awarded the position, Ostermeyer allegedly tailored the solicitation to his specific skills and experiences.
Federal conflict of interest laws prohibit executive branch employees from participating personally and substantially in matters in which they have a financial interest. Since Ostermeyer had a financial interest in the contract solicitation, the government alleged that he could not participate in drafting it and, therefore, violated 18 U.S.C. § 208(a).
October 21, 2013
Senior officer, NCIS agent are among those arrested in Navy bribery scandal
The U.S. Navy is being rocked by a bribery scandal that federal investigators say has reached high into the officer corps and exposed a massive overbilling scheme run by an Asian defense contractor that provided prostitutes and other kickbacks.
Among those arrested on corruption charges are a senior agent for the Naval Criminal Investigative Service and a Navy commander who escaped Cambodia’s “killing fields” as a child only to make a triumphant return to the country decades later as the skipper of a U.S. destroyer.
The investigation has also ensnared a Navy captain who was relieved of his ship’s command this month in Japan. The chief executive of the Singapore-based defense contractor, Glenn Defense Marine Asia, and another company official were arrested last month at a San Diego harborside hotel after federal investigators lured them to the United States by arranging a sham meeting with Navy officials, according to court records and people involved in the case.
The unfolding investigation is shaping up as the biggest fraud case in years for the Navy. Federal prosecutors allege that Glenn Defense Marine, which has serviced and supplied Navy ships and submarines at ports around the Pacific for a quarter-century, routinely overbilled for everything from tugboats to fuel to sewage disposal.
October 17, 2013
Pharmaceutical firms paid to attend meetings of panel that advises FDA
A scientific panel that shaped the federal government’s policy for testing the safety and effectiveness of painkillers was funded by major pharmaceutical companies that paid hundreds of thousands of dollars for the chance to affect the thinking of the Food and Drug Administration, according to hundreds of e-mails obtained by a public records request.
The e-mails show that the companies paid as much as $25,000 to attend any given meeting of the panel, which had been set up by two academics to provide advice to the FDA on how to weigh the evidence from clinical trials. A leading FDA official later called the group “an essential collaborative effort.”
Patient advocacy groups said the electronic communications suggest that the regulators had become too close to the companies trying to crack into the $9 billion painkiller market in the United States. FDA officials who regulate painkillers sat on the steering committee of the panel, which met in private, and co-wrote papers with employees of pharmaceutical companies.
September 26, 2013
Navy Commander and NCIS Agent Charged in Bribery Scheme
A U.S. Navy commander, an NCIS Special agent and a Singapore businessman have been charged in what prosecutors call a worldwide bribery scheme involving hundreds of millions of dollars in defense contracts.
The case involves a multinational company that supplies Navy ships with food, water and waste services when they dock at countries in Asia. Leonard Francis, CEO of the Singapore-based Glenn Defense Marine Asia Ltd., was arrested in San Diego Monday and appeared in San Diego Federal Court Tuesday on charges in two separate bribery investigations. Francis, 58, allegedly bribed U.S. Navy Commander Mike Misiewicz, 46, to redirect U.S. Navy vessels to ports his company would benefit from, according to court documents obtained by NBC 7 News. He then allegedly bribed NCIS Special Agent John Beliveau, 36, to gain confidential information in a fraud investigation, the documents say.
All three have been charged with conspiring to commit bribery, which carries a maximum sentence of 5 years in prison.
September 12, 2013
House Ethics Committee Decides Against Full-Scale Investigations of Four Lawmakers
The House Ethics Committee won’t move forward with full-scale investigations into four lawmakers — Reps. Michele Bachmann (R-Minn.), Peter Roskam (R-Ill.), John Tierney (D-Mass.) and Tim Bishop (D-N.Y.) — but will continue to review three of those cases, the secretive panel announced on Wednesday. The panel voted to end outright its review of the allegations against Tierney. The Ethics Committee’s announcement that it will continue to look into Roskam, Bachmann, and Bishop but not launch full-scale investigations is the latest in a growing trend by the panel.
The committee has declined to empanel special investigative subcommittees to handle these matters, but then also has refused to end their investigations outright. The cases then sit in limbo, although based on past practice, the members face little chance of sanction by the committee. The Office of Congressional Ethics, the independent watchdog agency, recommended full investigations of all four lawmakers over the alleged violations. The Ethics Committee reviewed the cases for a three-month period before its Wednesday announcement.
August 14, 2013
McDonnell Returns "Tangible" Gifts from Donor
Virginia Gov. Robert F. McDonnell said he has returned all “tangible” gifts that were given to him and his family members by a wealthy political supporter but declined to detail a list of those items.
Rich Galen, a spokesman for McDonnell’s legal team, said Tuesday that McDonnell did not intend to release an itemized accounting of the items returned to Jonnie R. Williams Sr., the chief executive of a dietary supplement company whose relationship with McDonnell is the subject of state and federal investigations.People familiar with the situation have said Williams’s gifts to the governor’s family included $15,000 worth of high-end clothing purchased for McDonnell’s wife, Maureen, at Bergdorf Goodman in New York and a $6,500 Rolex watch, engraved with the words “71st Governor of Virginia,” that Williams bought for the governor at Maureen McDonnell’s urging. Galen said Tuesday that the Rolex watch, as a tangible gift, was one of the items the governor returned.
August 05, 2013
Former Homeland Security Supervisor Heads to Prison
A former manager at the Homeland Security Department is going to prison for taking nearly $13,000 in bribes from a government contractor.
A U.S. District Court judge recently sentenced Derek Matthews, 47, of Harwood, Md., to 15 months in prison and one year of supervised release for using his position at the Federal Protective Service to help a security service firm win more than $31 million in government contracts. Matthews pleaded guilty in April.
Matthews, who served as deputy assistant director for operations at FPS and later was promoted to regional director for the national capital region, netted $12,500 in bribes from Keith Hedman, an executive at an Arlington, Va., consulting firm, known as Company B in court documents. Company B was a shell company Hedman set up to obtain federal contracts set aside for minority-owned and disadvantaged small businesses.
Hedman in 2011 agreed to pay Matthews $50,000 in monthly installments over a year and a percentage of profits from new business in exchange for Matthews’ help finding and winning contracts. Matthews, who supervised 13,000 employees and 9,000 federal buildings in his job, received three monthly payments before investigators interrupted the scheme.
July 31, 2013
VA Governor McDonnell says he will return other gifts
Gov. Robert F. McDonnell said Tuesday that he will return all the gifts from businessman Jonnie R. Williams Sr. and indicated for the first time that he was not aware of everything the Star Scientific executive had given to his family.
McDonnell (R) made the comment in a radio interview one week after announcing that he had repaid $120,000 in loans that Williams had made — $70,000 to a real estate company owned by the governor and his sister and $50,000 to first lady Maureen McDonnell.His remarks were his first since last week’s announcement, which was made in a written statement as the governor was en route to Afghanistan to visit Virginia troops. McDonnell said his first priority was to repair the trust with Virginia citizens that may have been lost as a result of the loans and gifts.
July 11, 2013
Ex- Army Corps official sentenced in contracting scheme of ‘historic proportions’
A longtime Army Corps of Engineers employee and the mastermind of a government contracting scam of “historic proportions” will spend nearly two decades behind bars, a federal judge ruled Thursday.
“You made history for the wrong reasons,” U.S. District Judge Emmet G. Sullivan said before sentencing Kerry F. Khan of Alexandria to 235 months in prison and ordering him to pay more than $32 million in restitution.
Khan, a former contracting officer, was the ringleader of a network of corrupt public officials, government contractors and family members who stole taxpayer money through inflated billings and fake invoices in what authorities have called the largest bribery and “bid-steering scheme in the history of federal contracting.” The investigation has led to the prosecution of more than a dozen people and exposed weaknesses in oversight of federal government contracting.
July 10, 2013
McDonnell’s corporation, wife allegedly benefited from $120,000 more from donor
The Washington Post reports: A prominent political donor gave $70,000 to a corporation owned by Virginia Gov. Robert F. McDonnell and his sister last year, and the governor did not disclose the money as a gift or loan, according to people with knowledge of the payments.
The donor, wealthy businessman Jonnie R. Williams Sr., also gave a previously unknown $50,000 check to the governor’s wife, Maureen, in 2011, the people said.
July 09, 2013
SAIC pays $5.75M to settle false claims case
Defense contractor SAIC has agreed to pay $5.75 million to settle accusations the company circumvented the bidding process to win millions of dollars in Air Force contract work.
Unsealed Tuesday, the False Claims Act case was filed in U.S. District Court in Tampa, Fla., in 2010 by a retired Air Force lieutenant colonel, Timothy Ferner, who had previously worked as the chief of staff for the Coalition and Irregular Warfare Center at Nellis Air Force Base in Nevada, where SAIC was a contractor.
The complaint stemmed from a 2006 General Services Administration blanket purchase order awarded to SAIC for engineering and consulting services on “new products and emerging technologies,” according to the Justice Department, which joined the case last month.The Justice Department said in an announcement Wednesday that SAIC personnel provided false information to GSA contracting officials to win the blanket purchase order award. In particular, SAIC “caused another individual to falsely represent himself as an employee of the Senior Executive Staff of the Department of Defense and the Director of another federal agency,” according to DOJ. The DOJ statement does not identify the individual or explain further that individual’s role in the case.
July 02, 2013
IRS Under Fire Again, for Handling of IT Contract Fraud Case
A top Internal Revenue Service deputy switched course on Wednesday and agreed that an information technology contractor who allegedly misrepresented himself to qualify for preferences should be denied a pending contract. The statement came during a hodgepodge hearing of the House Oversight and Government Reform Committee that touched on everything from the scandal at the IRS tax-exempt division to the 2010 Affordable Care Act to the value of contract set-asides for enterprise zones and contractors with disabilities.
Beth Tucker, deputy IRS commissioner for operations support, backed off of previous statements and said her procurement team is likely to cancel the part of a large software contract destined for Strong Castle/Signet Computers, given new information made available this week by congressional investigators detailing false statements about the friendship between the company’s CEO and Gregory Roseman, recently relieved of his post as deputy director of IRS Enterprise Networks and Tier Systems Support.
The two also exchanged at least 350 text messages that agency supervisors and lawmakers called “offensive and unprofessional” in using anti-gay slurs against IRS colleagues. This was done while Roseman was allegedly steering a contract toward Strong Castle chief executive Braulio Castillo, who stands accused of making false statements about his physical disability and the qualifications of his firm.
Committee Chairman Rep. Darrell Issa, R-Calif., on Tuesday released a report on the panel’s three-month finding that Castillo’s company had only $250,000 in annual revenue, but that his personal relationship with Roseman -- they were college roommates -- “facilitated” consideration for contracts worth up to $500 million in just six months. It also found that Strong Castle/Signet Computers “gained an advantage over competitors by gaining a socioeconomic HUBzone business designation by making false representations to the Small Business Administration.
June 19, 2013
Senior Energy Official Convinces Colleagues to Hire His Three Children
A senior official at the Energy Department successfully lobbied colleagues at the agency to hire his three children for summer internships, despite strict rules against nepotism in the federal government, according to an internal audit.
Energy’s inspector general found an employee in the Energy Efficiency and Renewable Energy Office contacted 12 department employees -- including one high-ranking human capital official -- to encourage the hiring of his three children. In one instance, the official convinced an office to reverse its decision to go without interns and instead take on one of his children.
The employee -- whom the IG report did not name -- contacted the Office of the Chief Information Officer and followed up “a number of times” before the office ultimately “decided to reverse its previously announced decision” to forgo interns for the summer, the report said. The other two children worked in the same renewable energy office as their father. All three were hired as part of the Student Temporary Employment Program, or STEP.
June 18, 2013
DOE made $450,000 in questionable payments to former lawmaker's firm
Federal Times reports: A former congresswoman’s consulting business reaped almost a half-million dollars from the Energy Department for questionable work, according to a new inspector general’s audit. Officials at two of the department’s facilities — Oak Ridge National Laboratory in Tennessee and the Nevada National Security Site — said there were “no deliverables” associated with their payments to former Rep. Heather Wilson’s company, Heather Wilson and Co., according to the report.
In all, the company received more than $450,000 in payments from four Energy Department facilities. Information provided by the company to auditors to document the services provided to the department “did not meet even minimum standards for satisfying [Federal Acquisition Regulation] requirements,” the inspector general said in the audit.
June 11, 2013
At Energy Department, nepotism is ‘open and widely accepted,’ report says
A form of nepotism prohibited within federal agencies has become “open and widely accepted” at the Energy Department, according to a federal watchdog report.
Energy Department inspector general Gregory H. Friedman said in the report last week that one of the agency’s senior managers advocated for three of his college-age children to be hired for department internships last year.
The unnamed manager, who served in an executive role with the agency’s energy efficiency and renewable energy division, contacted 12 officials to inquire about opportunities for his children, according to the inspector general. Investigators found that one department reversed its previously announced decision to not hire interns for 2012, after the senior official contacted division leaders. All of the official’s children were hired by the agency during that year, according to the report. Two of the officials who made those hires told investigators they did not feel pressured by the father, the report said.
Nonetheless, the inspector general was critical of the manager advocating on behalf of his children. “Nepotism, or even its appearance, can have a decidedly negative impact on morale within an organization,” he said in the report. “The impact is likely severe, especially when considering the intense competition for . . . intern positions within the department.”
June 10, 2013
Former D.C. Council Member to Plead Guilty to Bribery Charges
The Washington Post reports: From a distance, Michael A. Brown was the picture of Washington success: Son of a political legend, member of the D.C. Council, well-dressed lobbyist, owner of a sprawling upper Northwest home. It became, in recent years, an upscale facade. Tax liens, mortgage troubles and unpaid rent hinted at deep financial difficulties for Brown, who lost a reelection bid last year and whose bills mounted with a lavish lifestyle and lengthy divorce.
Between July and March, Brown was so desperate for funds that he took $55,000 in cash from a company that he thought was seeking business opportunities with the city government, federal authorities alleged Friday. In fact, the business leaders were undercover investigators with the FBI. On Friday, prosecutors charged Brown, 48, with bribery, alleging he accepted the cash in exchange for a promise to help the business secure contracts with the city and a key government certification. The charge was presented in a criminal information, a document that can be filed only with a defendant’s consent and that typically indicates a plea deal has been reached. Brown told supporters Thursday night that he planned to plead guilty, and his lawyer confirmed the plan Friday. A hearing has been set for Monday at the U.S. District Court in Washington.
May 22, 2013
Anthrax drug brings $334 million to Pentagon advisor's biotech firm
The Los Angeles Times reports: Over the last decade, former Navy Secretary Richard J. Danzig, a prominent lawyer, presidential advisor and biowarfare consultant to the Pentagon and the Department of Homeland Security, has urged the government to counter what he called a major threat to national security.
Terrorists, he warned, could easily engineer a devastating killer germ: a form of anthrax resistant to common antibiotics. U.S. intelligence agencies have never established that any nation or terrorist group has made such a weapon, and biodefense scientists say doing so would be very difficult. Nevertheless, Danzig has energetically promoted the threat — and prodded the government to stockpile a new type of drug to defend against it.
Danzig did this while serving as a director of a biotech startup that won $334 million in federal contracts to supply just such a drug, a Los Angeles Times investigation found.A number of senior federal officials whom Danzig advised on the threat of bioterrorism and what to do about it said they were unaware of his role at Human Genome.
Dr. Philip K. Russell, a biodefense official in the George W. Bush administration who attended invitation-only seminars on bioterrorism led by Danzig, said he did not know about Danzig's tie to the biotech company until The Times asked him about it.
Danzig said in an interview that he believed his position at Human Genome posed no conflict. He said he had tried to improve policymakers' understanding of biodefense issues, including the threat of antibiotic-resistant anthrax, but never lobbied the government to purchase raxi. "My view was I'm not going to get involved in selling that," Danzig said. "But at the same time now, should I not say what I think is right in the government circles with regard to this? And my answer was, 'If I have occasion to comment on this, it ought to be in general, as a policy matter, not as a particular procurement.'
May 09, 2013
Greenberg Traurig law firm at the center of ‘political intelligence’ case
A lobbyist hears from “very credible sources” that the White House is going to reverse a major health-care proposal. He tells a client in an e-mail, and that person then tells his own clients in a research note.
It sounds like the game of telephone that lobbyists, government officials and even reporters are drawn into every day in Washington. Except in this case, the chain of information may have triggered a spike in trades on Wall Street — and has now led to a government investigation into possible insider trading.
How the lobbyist, who works at the law firm Greenberg Traurig, stepped into this morass offers a window into what has become a routine and profitable practice at law firms and lobbying shops: In addition to their usual work, lobbyists share with financial firms the latest political tidbits they are gathering from sources, sending an e-mail here and there with the latest “political intelligence.” The financial firms value the information because it can inform their investments.
Recent attention has focused on a new breed of companies that offer political intelligence exclusively for investor clients, but some of the country’s most prominent law firms have gotten into the business, too.
May 08, 2013
Interesting DC Bar Opinion on Conflicts and Furlough-Related Employment Complaints
Can a government lawyer represent an agency employer in defending the agency from furlough-related complaints brought by other agency employees when the lawyer was also furloughed and is pursuing her own complaint in which the allegations are substantially similar to those in the complaint she is defending?
Under the D.C. Rules of Professional Conduct, a lawyer has a conflict of interest in a matter when “[t]he lawyer’s professional judgment on behalf of the client will be or reasonably may be adversely affected by the lawyer’s responsibilities to or interests in a third party or the lawyer’s own financial, business, property, or personal interests.” Rule 1.7(b)(4). Such a conflict plainly exists in this situation.
However, so-called individual interest conflicts like this one can be waived under Rule 1.7(c) if:
1.Each potentially affected client provides informed consent to such representation after full disclosure of the existence and nature of the possible conflict and the possible adverse consequences of such representation; and
2.The lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client.
The only affected client here is the agency. The agency’s informed consent to the conflicted lawyer’s representation notwithstanding her individual interest conflict would satisfy the requirements of the first paragraph. But client consent alone is not enough. Under the second paragraph, the lawyer must also reasonably believe that she can provide competent and diligent representation to the agency in the matter despite her personal interest, and her belief must be objectively reasonable under the circumstances. That may be a difficult standard to meet when the lawyer is pursuing her own challenge to the furlough while being asked to defend the agency against substantially similar challenges by other affected agency employees.
The full opinion may be found here.
May 02, 2013
SEC subpoenas firm, individuals in a case of leaked information
The Securities and Exchange Commission has issued subpoenas to a firm and individuals in connection with the leak last month of a federal funding decision that appeared to cause a surge in stock trading of several major health companies.
The move deepens the government’s scrutiny of the growing “political intelligence” industry, which has been thriving on delivering valuable information from Washington to investors. This relatively new breed of companies capitalizes on the fact that decisions made in Washington — whether a regulator blocking a big merger or a lawmaker tweaking legislation — can create opportunities for stock traders to make money.The latest case emerged April 1 when Height Securities, a Washington-based stock brokerage firm, alerted its clients that the government would soon make a decision favoring private health insurers who participate in a Medicare program. The alert went out 18 minutes before the end of the trading day, sparking a surge in trading in the shares of several major health-care firms, including Humana and Aetna. The official government announcement was made after trading closed for the day.
April 10, 2013
Former FEMA Official Gets Probation in Conflict of Interest Case
A former senior FEMA official was sentenced to probation Tuesday in a conflict-of-interest case involving a multimillion-dollar government contract with a polling and market research firm.
Timothy W. Cannon, the former human resources director at the Federal Emergency Management Agency, pleaded guilty in January to trying to arrange a job for himself at the Gallup Organization at the same time he was overseeing and trying to expand the firm’s contract with his government agency.Cannon, 63, has been barred from future government contracting work and has agreed to pay a $40,000 fine in a separate civil case. In that federal whistleblower case, which names Cannon, the Justice Department alleges that Gallup inflated its cost estimates and work hours for three federal agencies.
March 25, 2013
Michele Bachmann Faces Congressional Ethics Probe
Rep. Michele Bachmann (R-Minn.) is under investigation by the Office of Congressional Ethics (OCE) for alleged misuse of campaign funds, as first reported by the Daily Beast.
An OCE investigation is a preliminary probe; the office can either dismiss a case or recommend a full House Ethics Committee investigation. Peter Waldron, who served as Bachmann’s national field coordinator in the 2012 presidential race, has filed a Federal Election Commission complaint alleging that the lawmaker’s campaign improperly used leadership PAC funds to pay presidential campaign staff.
March 15, 2013
Washington Post Reports Grand Jury Investigating Senator Menendez
The Washington Post reports: A federal grand jury in Miami is investigating Sen. Robert Menendez (D-N.J.), examining his role in advocating for the business interests of a wealthy donor and friend, according to three people aware of the probe.
Menendez has intervened in matters affecting the financial interests of Florida ophthalmologist Salomon Melgen, seeking to apply pressure on the Dominican government to honor a contract with Melgen’s port-security company, documents and interviews show. Also, Menendez’s office has acknowledged he interceded with federal health-care officials after they said that Melgen had overbilled the U.S. government for care at his clinic.Melgen has provided Menendez with plane flights and hospitality at his Dominican vacation home, say people acquainted with their relationship. Menendez admitted he failed to disclose two trips he took to the Dominican Republic on Melgen's plane in 2010. Menendez said he wrote Melgen a personal check this winter for $58,500 to reimburse him for the plane rides. The Senate Ethics Committee is investigating why Menendez did not disclose the flights sooner.
February 27, 2013
Florida Couple Pleads Guilty for Roles in Procurement Contract Bribery Scheme
A Florida couple who owned a military contracting company pleaded guilty today in federal court in Salt Lake City for their roles in a bribery and fraud scheme involving federal procurement contracts.
Sylvester and Maria Zugrav were charged in an indictment, returned on Oct. 12, 2011, along with Jose Mendez, a procurement program manager for the U.S. Air Force Foreign Materials Acquisition Support Office (FMASO) at Hill Air Force Base, in Ogden, Utah.
Mendez was charged in the indictment with conspiracy, bribery and procurement fraud, and has since pleaded guilty to all charges and agreed to forfeit more than $180,000 he received as part of the bribery scheme and awaits sentencing.
According to court documents, the Zugravs owned Atlas International Trading Company, a business that contracted to provide foreign military materials to the U.S. government through FMASO. In his plea agreement, Sylvester Zugrav admitted that, from 2008 through August 2011, he gave Mendez more than $180,000 in bribe payments, and offered Mendez more than $1.05 million in additional bribe payments contingent upon Atlas’s receipt of future contracts with FMASO. In exchange for Sylvester Zugrav’s bribe payments and offers, Mendez ensured that Atlas and Sylvester Zugrav received favorable treatment in connection with procurement contracts, including, among other things, assisting Atlas in obtaining and maintaining procurement contracts; assisting Atlas in receiving payments on such contracts; and providing Atlas with contract bid or proposal information or source selection information before the award of procurement contracts.
February 21, 2013
Georgia Woman Admits to Taking Bribes for the Award of Government Contracts
A former employee at the Marine Corps Logistics Base Albany pleaded guilty today to receiving bribes related to the award of contracts for machine products.
Michelle Rodriguez, 32, of Albany, Ga., pleaded guilty before U.S. District Judge W. Louis Sands in the Middle District of Georgia to one count of bribery of a public official. During her guilty plea, Rodriguez, who worked as a supply technician in the Maintenance Center Albany (MCA), admitted to participating in a scheme to award contracts for machine products to companies operated by Thomas J. Cole and Frederick Simon, both of whom pleaded guilty to bribery charges in January 2013.According to court documents, the MCA is responsible for rebuilding and repairing ground combat and combat support equipment, much of which has been used in military missions in Afghanistan, Iraq and other parts of the world. To accomplish the scheme, Rodriguez would transmit bid solicitations to Simon by fax or email, usually following up with a text message specifying how much the company seeking the contract should bid. Simon, with Cole’s knowledge, would then bid the amount specified by Rodriguez on each order, which was normally higher than fair market value. Rodriguez was paid $75.00 cash per order. Rodriguez admitted during today’s hearing that she awarded Cole and Simon’s companies nearly 1,300 machine product orders, all in exchange for bribes.
January 31, 2013
Pentagon IG Finds DARPA Ethics Program Above Board
In a report released Thursday, Jacqueline L. Wicecarver, the Pentagon's assistant inspector general, concluded that Darpa’s ethics training “appropriately mitigated the potential for conflicts-of-interest." Its ethics policies are consistent with federal standards, and its employees tend to follow them.
In the major test case for conflicts of interest that the inspector general studied, Darpa came out with a clean bill of good-government health.
The case began with a request from a different watchdog, the Project on Government Oversight (POGO). As Danger Room first reported in August 2011, the group prevailed on the Pentagon inspector to take a broad, wide-ranging look at Darpa’s contracting process. The initial reason: the discovery that then-Director Regina Dugan owed her family firm, a Darpa contractor, tens of thousands of dollars. (Dugan’s spokesman said she recused herself from any dealing with the firm, RedXDefense. Dugan left Darpa last year to take a job with Google.)
January 16, 2013
Former FEMA Executive Pleads Guilty to Conflict of Interest Charge
The Washington Post reports the following:
A former Federal Emergency Management Agency executive pleaded guilty Tuesday to arranging employment with a polling and consulting firm that held a multimillion-dollar contract with the agency.
Former FEMA human resources director Timothy W. Cannon, 63, landed an offer for a six-figure job offer with The Gallup Organization while arranging a $6 million contract for the company to handle the agency’s “BEST Workforce Initiative,” according to a news release from the Justice Department.
Cannon, who led FEMA’s human resources division from July 2007 through February 2009, pleaded guilty to a conflict of interest charge Tuesday at the U.S. District Court for the District of Columbia. He faces a penalty of up to five years in federal prison.
January 09, 2013
Former HR FEMA Employee To Plead Guilty to Conflict of Interest Charge
A former human resources officer at the Federal Emergency Management Agency is reportedly pleading guilty to conflict of interest charges filed by federal prosecutors on Jan. 2. as part of a larger case involving alleged government contract overcharging by the Gallup Organization.
As reported by NBC News investigative reporter Michael Isikoff, Timothy Cannon, director of FEMA’s Human Capital Division from 2007 to 2009, plans to plead guilty to one felony charge for “knowingly and willfully” participating in the award of contracts to Gallup while arranging to accept a $175,000-a-year job with the polling and research firm.
The attorney for Cannon, a former Army officer, said his client accepts responsibility for his actions. The complaint included email exchanges from 2007 and 2008 in which Gallup discussed what became a $6 million contract to poll FEMA employees on training issues as part of the agency’s BEST Workforce Initiative. The exchanges included references to Cannon interviewing for a job with Gallup. An offer was eventually made but then withdrawn over ethics concerns, NBC News reported.
December 17, 2012
OGE Releases Advisory on 18 USC 205(e)
The U.S. Office of Government Ethics (OGE) has issued a Legal Advisory clarifying the scope of the exception at 18 U.S.C. § 205(e) for representation of persons with whom an employee has a personal relationship before the Government in connection with most matters. The exception’s provision that permits an employee to act as agent or attorney for his or her parent or child may include representation of an employee’s stepparent or stepchild if the stepchild is determined to be a “dependent child” of the stepparent or the stepparent is a lawful parent of the stepchild. For more information, please see Legal Advisory LA-12-09 dated December 14, 2012:
November 28, 2012
OGE Releases Paper on Outreach Initiatives Related to Preventing Corruption
The US Office of Government Ethics recently prepared a document that highlights U.S. Government outreach initiatives related to preventing corruption.
Two reasons to check out this document: 1. Put your day-to-day ethics work into a broader context. Get a sense for anti-corruption activities not only in the public sector but also the private sector and civil society. 2. Get ideas for outreach and effective information-sharing. Follow links to specific examples of useful websites and examples of outreach techniques.
OGE prepared this document, on behalf of the United States, in response to a request to States Parties for information on awareness-raising policies and practices that supports Ch. II (Preventative Measures) of the UN Convention Against Corruption. To access the paper, visit http://www.oge.gov/About/International-Activities/Papers-and-Speeches/
Questions? Contact Wendy Pond at email@example.com
November 13, 2012
Post-Employment Restrictions Examined as Former Feds Seek Jobs with Foreign Companies
Nextgov.com reports: As a major Chinese telecommunications company suspected of espionage hires former U.S. government officials, critics are raising concerns about the adequacy of government post-employment restrictions, as well as the risk of national security threats.
Huawei, based in Shenzhen, China, has been methodically snapping up former senior federal officials, lobbyists and congressional staffers. Company officials say they are attempting to attract more U.S. business, partly by recruiting well-respected Westerners with government and security backgrounds.
The employment of more Americans at foreign firms can benefit the United States by fostering worldwide security standards and boosting stateside investments. But the unknown variable is to what degree Huawei, a multinational tech company founded by a former People’s Liberation Army member, acts on behalf of the Chinese military. A congressional investigation indicated the company might be inserting backdoors into products that can remotely siphon data or sabatoge computers.
October 09, 2012
Materials from Oct. 4 IEC Meeting
Thanks again to our speakers, Talisha Searcy and Athena Jones, who gave a wonderful presentation last week. Attached are the handouts and powerpoint presentation:
October 01, 2012
President Signs Amendment to Extend STOCK Act Posting Deadline to December 8th
The Office of Government Ethics reports: On September 28, 2012, President Obama signed into law S. 3625, which extends the date by which certain Executive Branch public financial disclosure forms must be made available on the internet to December 8, 2012. Subsection 11(a)(1) of the STOCK Act (Public Law 112-105), originally required that by August 31, 2012, public financial disclosure forms filed pursuant to title I of the Ethics in Government Act of 1978 (EIGA) in calendar year 2012, and in subsequent years, be made available to the public on the official websites of the respective Executive Branch agencies not later than 30 days after such forms were filed. The STOCK Act was amended by S. 3510 (Public Law 112-173) to move this deadline to September 30, 2012, and the U.S. District Court for the District of Maryland Southern Division subsequently enjoined posting under the STOCK Act until October 31, 2012. Section 1 of S. 3625 extends the effective date of subsection 11(a)(1) of the STOCK Act to December 8, 2012, except for certain high-level filers occupying positions listed at Level I and II of the Executive Schedule.
S. 3625 also directs the National Academy of Public Administration to study the issues raised by website publication of financial disclosure forms and to issue a report with findings and recommendations. In addition, section 3 of S. 3625 clarifies that an employee subject to the periodic transaction reporting requirement under subsection 103(l) of EIGA must also report any purchase, sale, or exchange of securities by the employee’s spouse or dependent children. The periodic transaction reporting requirements for an employee’s spouse and dependent children cover transactions occurring on or after January 1, 2013.
S. 3625 is available in portable document format (PDF) on OGE’s website at: http://www.oge.gov/About/Legislative-Affairs-and-Budget/Ethics-Legislation/
August 06, 2012
GSA’s Ethics Program Approved Just Days After Scandal-Plagued Conference
The Washington Post reports that, just days after news broke of GSA's scandal-laced conference in Las Vegas, the Office of Government Ethics issued a positive review of the ethics program there, based largely on GSA's financial disclosure procedures and ethics training programs. The article also notes that an OGE employee had noted in early 2010 that GSA had issues with controlling conflicts of interest, recommending frequent reviews of its ethics program.
May 01, 2012
New U.S. v. POGO decision
US District Court for DC issued its decision on the case about whether a Dept of Interior employee who received a $383,600 monetary award by a group that the employee had assisted in bringing a successful false claims action, had violated 18 USC 209. The case was previously vacated by the Circuit Court (United States v. POGO, 616 F.3d 544 (DC Cir. 2010)). The District Court ruled against the employee, in summary judgment, and ordered him to repay the entire amount of the award (United States of America v. Project on Government Oversight, DDC CA No. 03-0096 (JDB)--March 21, 2012).
See FedSmith discussion http://www.fedsmith.com/article/3357/former-fed-who-breached-his-fiduciary.html
See DC Dist Court decision Download 86909812-US-v-POGO
April 12, 2012
Interesting Washington Post Article on Presidential Candidates 278s
A Washington Post article discussed in depth the OGE 278 (Public Financial Disclosure) requirements for Presidential candidates, including focus on what must be disclosed and when.
April 04, 2012
President signs STOCK Act
"On April 4, 2012, the President signed the Stop Trading on Congressional Knowledge Act of 2012 (STOCK Act) (S. 2038). The Act establishes new requirements for Executive Branch ethics programs, ethics officials, and the thousands of employees who currently file financial disclosure reports pursuant to the Ethics in Government Act. OGE fully supports the Act’s focus on improving transparency and promoting public confidence in government and is carefully analyzing the provisions of the new law. In consultation with DAEOs and other senior agency ethics officials, OGE will issue a series of Legal, Program, and Education Advisories to implement the Act’s provisions.
Questions from agency ethics officials should be directed to the OGE Team that supports your agency. Media and related inquiries should be directed to Vincent Salamone at (202) 482-9292."
See STOCK Act: Download STOCK Act
March 29, 2012
The True Cost of Conflict of Interest
The private-sector-focused Business Ethics Blog recently published an nteresting article about the real cost of conflicts of interests that has implications for the public sector. In particular, the author questions whether contractors who give gifts are intentionally causing others to violate their conflict of interest duties and encouraging people to violate the Standards of Conduct. Food for thought.
March 20, 2012
Ethics in the News
- Fed. Prosecutor under Fire for appearance of conflict. Read the GovExec article about a Louisiana Federal Prosecutor in trouble for "engaing in outside activities that would appear to create a conflict of interest." The cause? Anonymously posting 600 comments on a local news webpage, including on cases and judges. See full article at http://www.govexec.com/technology/2012/03/federal-prosecutor-under-fire-anonymously-commenting-news-website/41504/.
- The Hill reports on STOCK Act, "Insider-trading bill grinds to halt." Discussing the possible ways forward and concerns about the missing political intelligence provision. See full article at http://thehill.com/homenews/house/216875-insider-trading-bill-stock-act-grinds-to-halt.
- Proposed Legislation, Congressional and Federal Employee Tax Accountability Act of 2012 (S. 2195), would require Congressional and Executive branch employees to affirmatively report tax liabilities and would automatically trigger an Ethics probe. See FedSmith article at http://www.fedsmith.com/article/3346/legislation-would-force-ethics-probe-tax.html.
- NYTimes article on all kinds of conflicts of interest, in particular its application re SEC and private sector failure to disclose possible or actual conflicts. http://dealbook.nytimes.com/2012/03/19/how-wall-street-deals-with-conflicts/?ref=business.
March 07, 2012
White House Hiring of Former Lobbyist Questioned
The Washington Post's Dana Milbank questions the hiring of former lobbyist Steve Ricchett as a counselor to Vice President Biden.
February 10, 2012
Industry Liaisons Raise Questions at FDA
POGO questions why "voting members of the FDA panel, including its chairperson, turned out to have prior relationships with Bayer or a company that markets a generic equivalent of Yaz and Yasmin. In one case, the ties involved thousands of dollars in fees, while some of the other panel members had conducted research funded by Bayer or the generic manufacturer. The four all voted in favor of the Bayer pills and related contraceptives, tipping the balance.