I know for a fact that there are corrupt members of law enforcement in the Department Of Justice, corrupt attorneys at various state bar associations, and corrupt members of the Judiciary, and there is at a minimum either incompetence or severe understaffing at the SEC, if not also outright corruption.
But if there is one segment of the U.S. government where corruption is least likely to exist - it would have to be the FBI. Below we have a speech given by Robert S. Mueller, the Director of the Federal Bureau of Investigation, which we downloaded from the FBI website here.
Well ... where do we start?
We've been pestered by a Michael Moore wannabe about making a documentary. So we might have someone deliver a complaint (or two) by hand to Mr. Mueller's office, with a camera rolling for as long as allowed.
Q: Will such a complaint be placed on our website? A: Eventually, every elephant must take a crap.
Huh?
Look ... there are only so many seats in the lifeboats ... know what I mean? The big fish usually make sure that the small fish get eaten.
Say Wha?
If I was a junior partner or associate, I would not gamble my young behind on the downstream loyalty of the same senior partner who's been taking home millions per year while I billed 60 to 70 hours per week.
With the exception of Mr. Gellene and that Securities class action bucket shop, there hasn't been much of any enforcment against a BigLaw firm outside of a John Grisham novel. But in order to illustrate what might happen if the FBI came full force into a lawfirm, let's just look what happens at a non law firm (a/k/a client) when it hits the fan and someone is needed for the chopping block. Take for instance the Leslie Fay bankruptcy case: the entire $100 Million accounting fraud was pinned on a junior controller whose meager bonus was never affected by the firm's earnings. (Don't have the space here to explain how Bear Stearns and some "other issues" related to that case. We just wanted to illustrate how big crimes get pinned on little people with the help of expert private practise attorneys.)
Who do you think the big dogs are going to select to blame the failure to disclose a conflict?
Hint: The Big dogs aren't the ones that get rolled into Hors d'oeuvres.
Don't just be mean, what should I do?:
Well, whistle-blowers exposing fraud by their own firm are protected by law. And if you don't wait too long, being the one who provides the dirt to the FBI is what they call gettin' a stay out of jail card. If keeping your own hintern out of prison is not enough incentive, consider how Cynthia Cooper parlayed her experience into a book, a half a dozen awards, and up to $25,000 per speaking engagement. Not a bad package when you think about it really carefully.
_____________________
_____________________
Robert
S. Mueller, III
Director
Federal Bureau of Investigation
American Bar Association Litigation Section Annual Conference
Washington, D.C.
April 17, 2008
Good afternoon. It is a pleasure to be here among friends and colleagues.
Anyone who follows the news these days, and sees repeated references to
corporate fraud and public corruption, might think the nation is in the
midst of a moral crisis.
Have we, as a society,
become more corrupt? Or have we in the FBI simply become more adept at
rooting out fraud and corruption?
Corruption, in
one form or another, is nothing new. The so-called “robber barons” of
the Industrial Age cheated each other, their competitors, and their
consumers. During Prohibition, public officials who decried the vices
of liquor by day were bootlegging by night. Even the so-called Chicago
“Black Sox” of the 1919 World Series played their part in American
history.
As they say, the more things change, the
more they stay the same. The robber barons of today have brought a
laundry list of corporations to ruin. Billions of dollars lost,
thousands of shareholders victimized, and pension funds destroyed.
We have seen a similar laundry list of politicians who have violated
the public trust for their own benefit, from the halls of Congress to
the city councils of small-town America.
It would seem that desire for the good life has become what Teddy Roosevelt once termed the “get-rich-quick theory of life.”
Today, I want to talk about the need for integrity—integrity in the
marketplace, in the boardroom, and in government. I want to focus on
the importance of integrity in the FBI’s mission as well. And I would
like to touch on your role in this ethical calculus.
The FBI and Corporate Fraud
In the wake of September 11th, counterterrorism became the FBI’s top
priority. Yet at the same time, we were confronted with a rash of
corporate wrongdoing, including Enron, WorldCom, and Qwest. We needed
to prioritize our resources to effectively combat both crime and
terrorism.
Today, we have more than 1,800 agents
working nearly 17,000 white collar cases, from public corruption and
financial fraud to health care and mortgage fraud.
The number of corporate fraud cases we investigate has increased by
more than 80 percent since 2003, despite the change in our priorities.
We obtained more than 490 corporate and securities fraud convictions in
2007. Thirty-three insider trading indictments were returned against
employees of companies such as Goldman Sachs, Morgan Stanley, Credit
Suisse, and UBS Securities. A number of you may be more familiar with
these cases than I am.
Last month, five former
executives of National Century Financial Enterprises were convicted of
a $1.9 billion dollar fraud scheme.
Last July, former Hollinger International CEO Conrad Black was convicted of racketeering, money laundering, and fraud.
And in June, three former vice presidents at Countrywide Financial Corporation pled guilty to insider trading.
As Wall Street analysts would say, business is booming for the FBI,
and, by extension, for those of you who are defense counsel.
The agents and analysts who work these cases do some of the most
complex, tedious, and—ultimately—significant work we do for the
American public.
But we do not hold the slightest
pretense that we could do this without the larger team—the Securities
and Exchange Commission, the Financial Crimes Enforcement Network, and
our partners in the United States Attorneys Offices, among others. Our
success depends on these partnerships.
We likely
will see more corporate fraud cases in the months to come, because of
the ripple effect of the subprime crisis and its impact on the credit
market.
And as housing prices continue to fall,
more financial misdeeds will no doubt come to light. As financier
Warren Buffett said in his annual letter to shareholders last month,
“You only learn who has been swimming naked when the tide goes out—and
what we are witnessing…is an ugly sight.”
We are
investigating more than 1,300 individual mortgage fraud matters.
Perhaps more importantly, we have identified 19 corporate fraud matters
related to the subprime lending crisis—cases that may have a
substantial impact on the marketplace.
We are
targeting accounting fraud, insider trading, and deceptive sales
practices. These investigations may well lead to other instances of
fraud, from investment banks and private equity firms to hedge funds.
We do not take these investigations lightly, nor do we open corporate
fraud cases without careful consideration. We do understand the impact
that public disclosure of a criminal investigation may have on a
company’s reputation and economic standing.
These
investigations further emphasize the need for independent board
members, auditors, and outside counsel. Shareholders rely on the board
of directors to serve as the corporate watchdog. But often, we see
conflicts of interest in the corporate suites.
Board members may be beholden to the executives they are expected to
oversee. Many directors may be current or former senior executives,
with a mutual interest in maintaining the status quo.
They may be key shareholders who want to improve the value of their
investment. And if anything goes wrong, they may start circling the
wagons, rather than sounding the alarm.
Hearing
anyone say they are surprised by such behavior is like the police chief
in the movie “Casablanca” announcing that he is “shocked…shocked”
to find gambling going on under his nose in Rick’s Café…just moments
before he collects his roulette winnings from the night before.
Many of you here today are those to whom business leaders turn for
counsel. You are often one of the first lines of defense. You are the
gatekeepers—the ones who must say, “This is the right thing to do.”
I will say that we in the FBI have also had our share of missteps
resulting from inadequate internal controls. And we understand that we
need to do a better job of ensuring compliance in our own house. To
that end, we have recently taken a page out of the private sector’s
book.
Last year, we created a Bureau-wide
compliance program. The Office of Integrity and Compliance will help
ensure that we comply with both the letter and the spirit of the laws
and policies by which we are bound.
As we all
understand, it is better for a company to self-report and remediate its
own wrongdoing before the FBI and the Department of Justice become
involved. Executives who let the situation escalate to the point of a
sudden restatement—and a resulting loss of shareholder confidence—often
do greater harm to the companies they are trying to protect than if
they had exercised early intervention.
In my days
as defense counsel with a firm representing corporate targets, I met a
number of executives who could rationalize every bad decision. They
would say it was “business as usual”—that they were acting in the best
interests of the company, given financial constraints and the pressures
of running a business.
And I would think to
myself, “You broke about 14 laws before breakfast. How could you fail
to see you were doing anything wrong?”
I saw
executives who did not start out intending to break the law. They would
argue they were playing by the same rules as everyone else. They began
to believe their own explanations. But it is a slippery slope from
behavior that skirts ethical or legal boundaries to behavior that
crosses the line completely.
It calls to mind the
saying: If you jump out of a window on the 100th floor, and you seem to
be doing fine as you pass the 40th floor, that doesn’t mean you don’t
have a big problem. Rationalization will not provide much padding when
you hit the pavement.
The FBI and Public Corruption
I want to turn to public corruption for a moment. Unfortunately, the
private sector has by no means cornered the market on greed.
Public corruption is our top criminal priority, for the simple reason
that it is different from other crimes. Corruption does not merely
strike at the heart of good government. It may strike at the security
of our communities.
The vast majority of public
officials are honest in their work. They are committed to serving their
fellow citizens. Unfortunately, some have abused the public trust.
We have more than 2,500 pending public corruption investigations—an
increase of more than 50 percent since 2003. In the past five years,
the number of agents working public corruption cases also has increased
by more than 50 percent. We have convicted more than 1,800 federal,
state, and local officials in the past two years alone.
For a nation built on the rule of law—and on faith in a government of
the people, by the people, and for the people—we can and should do
better. Ultimately, democracy and corruption cannot co-exist.
The FBI is uniquely situated to address public corruption. We have the
skills to conduct sophisticated investigations. But more than that, we
are insulated from political pressure. We are able to go where the
evidence leads us, without fear of reprisal or recrimination.
Many of our investigations are well known. Others may be familiar only to local residents, but they are no less important.
For example, 22 individuals from the Robeson County Sheriff’s Office in
North Carolina have pled guilty to drug conspiracy, racketeering, and
fraud.
A state legislator from Georgia pled guilty last month to laundering what he believed to be proceeds from the sale of cocaine.
And a long-term undercover operation in Arizona snared nearly 70
military and law enforcement personnel for accepting hundreds of
thousands in bribes. These individuals conspired to smuggle cocaine,
drug money, and illegal immigrants across our southern border.
But if you would sell your oath and your honor for drug money, where
does one draw the line? For the right price, would such individuals
permit terrorist operatives to enter the country?
In the end, it does not matter if the corruption is national or local.
It does not matter if it is millions of dollars, or merely hundreds.
There is no level of acceptable corruption. The violation of trust is
the same. The damage to the taxpayers is the same.
We must continue to dedicate the resources necessary to investigate
public corruption. For if we in the FBI do not handle such cases, no
one will.
* * *
Politicians who betray the trust of their constituents harm the
integrity of our government. Executives who betray the trust of their
employees and their shareholders harm the integrity of the marketplace.
Left unchecked, corporate fraud and public corruption will rip the very
fabric of our democracy.
General George Patton
once said that no good decision was ever made in a swivel chair.
Integrity requires that we stay on course, that we stay true to
principles of honesty, ethics, and transparency…without swinging back
and forth to meet the demands of the day…without altering our position
to suit the economic, political, or social climate.
At the turn of the 20th century, Teddy Roosevelt took on the robber
barons. He targeted corporate fraud and corruption, and commissioned
what later became the FBI to continue that mission.
Roosevelt asserted that “Character, in the long run, is the decisive
factor in the life of an individual, and of nations alike.” These words
ring true today. Character will be our deciding factor.
It is my hope that by working together, we can reduce corporate fraud and public corruption. We each have a role to play.
Together, we can bring to light the wrongdoing that threatens our
economy, our security, and the welfare of our nation. Together, we can
help create a culture of integrity.
Thank you for having me here today, and God bless.
Powered by AkoComment 2.0! |
Robert S. Mueller
Corruption complaint to Thomas P. O'Brien prior to his disbanding of the Public Corruption Unit
