CORPORATE CRIME REPORTER
Deal with Ashcroft Under Fire
21 Corporate Crime Reporter 47, November 29, 2007
In New Jersey this week, a world of criticism is coming down on U.S. Attorney Christopher Christie.
Christie is seen as the Republican front runner in New Jersey’s 2009 Governor’s race.
And Christie’s ex-boss, former Attorney General John Ashcroft, is one hell of a Republican fund raiser.
So, who does Christie choose to be a monitor in a deferred prosecution deal he recently cut?
In September, 2007, Christie announced a $311 million settlement to end an investigation into kickbacks made by leading knee and hip replacement manufacturers.
He appointed Ashcroft to be the corporate monitor for one of those companies – Zimmer Holdings.
And the Newark Star Ledger reported last week that Ashcroft will be paid between $29 million and $52 million for his 18 months of work.
Because the deal was cut by Christie – a reputed anti-corruption crusader – it has come under intense criticism in New Jersey.
Two members of the New Jersey Congressional delegation – Bill Pascrell (D) and Frank Pallone Jr. (D) – have sent letters questioning the deal.
Pascrell wants the House Judiciary Committee to open hearings on deferred prosecution agreements.
Pallone is considering drafting legislation to address how monitors are chosen.
New Jersey Star-Ledger columnist Tom Moran says “Christie should be able to see the design flaw in this.”
“And it's not limited to the Ashcroft case,” Moran wrote this week. “He gave another monitoring job to Dave Samson, the former attorney general and a major political fund-raiser. Yes, guys like Ashcroft and Samson would probably raise money for Christie anyway. But this is New Jersey, and we have earned the right to suspect that a truckload of cash might have an effect.”
New Jersey anti-corruption crusader Carl Mayer told Corporate Crime Reporter that “anyone who is serious about cracking down on corporate crime knows that we must end these deferred prosecution agreements and the lucrative monitoring contracts that prosecutors use to reward former prosecutors and law enforcement personnel in a mutual back-scratching arrangement.”
“Bill Pascrell – who has his own ethical problems – is correct that Christie should never have struck a deal with Ashcroft for an obscene amount of money to monitor a company,” Mayer said. “But rather than posturing, the elected officials and prosecutors in New Jersey need to get down to the business of seriously prosecuting corporate and political corruption in New Jersey. Bob Torricelli, Jim McGreevey and numerous associated corporations have gone un-prosecuted in New Jersey while its leaders’ dicker over how to proceed."
Columbia University Law Professor John Coffee says that had the deferred prosecution deal been under court order, then perhaps Ashcroft wouldn’t have been chosen as the monitor.
“The thing that’s most distinctive about this deal is that there is no court involvement,” Coffee told Corporate Crime Reporter this week. “If you look at deferred prosecution agreements in the Southern District or the Eastern District of New York, they always involve the court. The court has jurisdiction and everything is subject to the court’s oversight, which is the way it should be.”
“The best system is when the court chooses the monitor,” Coffee said. “Or the court may say – give me three names and I’ll choose one of them. That way, the parties can get three people and the court chooses one.”
Coffee says that Christie has cut a deferred prosecution deal “where the U.S. Attorney chooses his own monitor.”
“The purpose of that monitor is partly to monitor the performance of the U.S. Attorney,” Coffee said. “But Mr. Christie has chosen his own watchdog.”
What about the fee itself?
“The fee is very large,” Coffee said. “But it is not larger than Richard Breeden got in the WorldCom case. But Richard Breeden became a virtual CEO of WorldCom. And he was effective in that role. So, you can have a very high fee. I don’t know what Ashcroft is doing for his fee. Richard Breeden had run the Securities and Exchange Commission. He knew a lot about how to get a company’s financial statements back onto the straight and narrow. I’m not sure Mr. Ashcroft has any similar knowledge. Other than being the head of the U.S. Department of Justice, he has no real law enforcement experience, either as a prosecutor, or as someone who knows something about supervising delinquent corporations.”
Had a court supervised this deferred prosecution agreement, would this deal gone through this way?
“It would have been different,” Coffee said. “And the payment would have been in return for very much more specified services. You might have had bills that you would file quarterly and the court would have to approve what you were doing. Here, there is no one monitoring whether he has performed services.”
Would Ashcroft have been chosen as a monitor if this agreement was court supervised?
“I don’t think events would have turned out this way had the court been placed in a critical decision making role,” Coffee said. “I can’t tell you that it would be impossible. Christie has done a number of deferred prosecution agreements. And in that regard, he has been a strong enforcer. But in the other ones he has brought against Pfizer and Bristol Myers – ex federal judges were chosen to be monitors. Herb Stern is the monitor under one and Judge (Frederick) Lacey, who was the toughest prosecutor ever out in New Jersey – was the other.”
Can this be undone?
could very easily be undone,” Coffee says. “But it can’t be
undone by a court. If Christie were embarrassed, he might undo it. Or Ashcroft
might resign. But I don’t know there is any way you can go to court and
get this invalidated.”
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