CORPORATE CRIME REPORTER
Covington’s
Breuer Goes Public in Defense of Gabelli
20 Corporate Crime Reporter 12(10), March 17, 2006
Most white collar attorneys defending a False Claims Act case are happy to toil away in private.
Cut the best deal for your client and move on.
But Lanny Breuer has gone public with his outrage over the qui tam
lawsuit filed against his clients – various firms set up by mutual fund
manager Mario Gabelli.
The lawsuit was filed by Russell Taylor III in 2001.
Taylor is being represented in the case by John Phillips of Phillips & Cohen
and Paul Gaffney of Williams & Connolly.
In the lawsuit, Taylor claims that Gabelli – who manages a reported $27
billion of other people’s money – created sham corporations which
masqueraded as small businesses in order to capture $160 million in discounts
and credits from the Federal Communications Commission (FCC) during bidding
for wireless radio licenses.
But Breuer lays down a simple defense – the FCC knew everything about
Gabelli and what he was doing.
Therefore, how could it be defrauded?
There was no deceit.
In fact, Breuer says – the FCC encouraged Gabelli and others to do these
things.
And the goal of Taylor – the relator who brought the lawsuit?
“His goal was to try and strike it rich,” Breuer says.
Taylor filed the lawsuit in 2001.
After five years of saying they were not a party to the lawsuit and stiffing
Breuer on discovery requests, the government said last week it was entering
the case on behalf of Taylor.
“It is a profoundly unfair case,” Breuer said in an interview with
Corporate Crime Reporter last weekend. “It was well known by
the FCC that deep pockets marry up with new entrepreneurs to come up with the
type of funding that was necessary for these kinds of cases. The FCC was fully
aware of Mr. Gabelli's involvement and encouraged it actively. And now years
later, to accuse Mr. Gabelli of doing something wrong is the height of hypocrisy
and unfairness.”
Breuer said that the FCC had dual motives.
“On the one hand, the FCC wanted to encourage young new companies,”
Breuer said. “On the other hand, the FCC was committed to getting as much
money into the federal treasury as they could. They wanted lots and lots of
money. And the only way they could get lots and lots of money for their licenses
was to have deep pockets backing these other entities.”
“That's what Mr. Gabelli did openly,” Breuer said. “And he
did it for himself and to allow these other entrepreneurs to pursue the American
dream. I believe that the real reason the FCC stayed out of this was because
they knew that the FCC was very much a part of all of this.”
“The FCC said nothing until a couple of days ago – even though you
had a lawsuit filed in 2001,” Breuer said. “Now, miraculously, a
couple of months before trial, the FCC is purporting to be deceived. And it
doesn't ring true.”
Over those five years, Breuer says that the government “has fought our discovery efforts every step of the way.”
“And really days after we were supposed to go argue this very issue before
the Court of Appeals – what documents are we entitled to – we now
find out that the government wants to enter the case,” Breuer said. “It's
extraordinary. We are accused of defrauding the United States. And the government
said – we are not a party to this lawsuit and therefore we are not going
to produce materials. Now the government claims that it wants to enter as a
party. And we still have not received anything but the most rudimentary discovery
from the United States. . .I'm deeply concerned that the FCC did not preserve
over the many years that it knew about this lawsuit the kind of documents that
are key to defending this kind of a case. I believe the FCC was aware of all
of the material issues in this case. Yet, the FCC has fought us for years and
not turned over anything. And now on the eve of trial, after giving us nothing,
they come in. I believe that is deeply troubling activity by the government.
I don't understand what is going on. I don't understand the discussions between
the relator and the government. I have no sense of what went on. But I find
it troubling and unfair.”
Breuer perhaps is best known for his defense of President Clinton during the
impeachment years. Breuer was one of a group of lawyers who defended Clinton
on the floor of the Senate.
We asked Breuer if he believes that President Bush ought to be impeached over
Iraq.
“No, I do not think President Bush should be impeached,” he says
without hesitation. “I'm a Democrat. He's subject to great criticism and
deservedly so. And Iraq has been a profound mistake. But it doesn't seem to
me that he ought to be impeached.”
(For a complete transcript of the interview with Lanny Breuer, see 20 Corporate
Crime Reporter 12(12), May 20, 2006, print edition
only.)
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