Paul Pelletier on Corporate Crime and Corporate Power in America

If you want to spend a few minutes to understand how corporate power works to undermine justice in America, watch the New York Times mini documentary titled – A Secret Memo that Could Have Slowed an Epidemic.

Paul Pelletier in New York Times documentary
A Secret Memo That Could Have Slowed an Epidemic

The memo in question is a more than 100 page prosecution memo written by federal prosecutors in Virginia in 2006.

The epidemic was the opioid epidemic that has now killed hundreds of thousands of Americans.

The company in the crosshairs of the prosecutors – Purdue Pharma.

Had the prosecutors been allowed to move on their memo and bring felony charges against key Purdue Pharma executives and proceeded in a full out prosecution of the company and its high ranking executives and owners, the epidemic could have been limited, saving tens of thousands of American lives.

But high powered corporate criminal defense attorneys went over the heads of line prosecutors and limited the range and scope of the prosecution.

The documentary opens with a man who was at the center of the power play, Paul Pelletier, who at the time was at the Fraud Section of the Department of Justice.

“It wasn’t the last time that I saw the political process stand in the way of achieving justice in a way that affected all of America,” Pelletier told New York Times reporter Barry Meier in the opening scene of the documentary.

“They wanted to prosecute the three principal executives that they had evidence against for a conspiracy that lasted quite a long time – to off-label market, to foist this drug they knew was addictive,” Pelletier told Corporate Crime Reporter in an interview last week. 

“When the defense wants to appeal a decision of a local U.S. Attorney’s office, they will come to the Deputy Attorney General at Main Justice. The Deputy Attorney General will kick it down to the appropriate Criminal Division section. In this case, it was the Fraud Section. At that point, we were beginning a robust health care fraud program.”

“They kicked that appeal down to us for a recommendation as to how to proceed. I gave it to my health care fraud deputy. His name is Kirk Ogrosky.” 

“He wrote a memo analyzing the legal and factual merits of the case. And he made a very strong recommendation – this is public – to allow the western division of the Eastern District of Virginia to proceed with the felony charges against the executives and the company.”

Is the more than 100 page prosecution memo public?

“It is not on-line and it’s not public. It’s a prosecution memo and it’s nowhere to be found. It’s a document that usually never sees the light of day.”

But that memo made it to Barry Meier of the New York Times back in 2016. And he quoted from it in his stories. But he didn’t put it up at the Times’ web site. 

“He quoted parts of the memo. And parts of it were quoted in The Crime of the Century, the documentary.”

In 2006, the lawyers for Purdue Pharma saw that they were facing felony charges in federal court in Virginia and they appealed to the Deputy Attorney General at Main Justice.

“Yes. The Deputy Attorney General ultimately makes the decision. But when they got it, they kicked it down to the relevant section, in this case the health care fraud unit in the Fraud Section.”

“Alice Fisher was the Assistant Attorney General. Underneath here was the Fraud Section. The head of the Fraud Section was Paul McNulty.”

They kick it down to you and your deputy Kirk Ogrosky comes up with a six page memo that concludes – these prosecutors in Virginia are right. They should proceed with felony indictments.

“Not only that they were right, their proposed charges had legal and factual merit and they should be allowed to proceed.”

Many believed that had these prosecutions moved forward, perhaps these executives who were indicted might have cooperated, the prosecutors might have moved up the chain of command in Purdue Pharma and perhaps prevented the worst of the epidemic over the last fifteen years.

“If you look at the testimony of Rick Mountcastle, one of the prosecutors who testified before Congress, he said just that. The plan was to convict these three executives. And I thought the evidence was overwhelming for conviction. The plan was to convict them. And because of the nature of the case and the nature of the harm involved – there were literally hundreds of thousands of people dead in the United States – he believed that upon conviction, the executives would have gone to jail for a long time.” 

“As prosecutors, we all know that that usually brings religion upon people who are convicted, and what they do is they cooperate against the people above them. And what Rick Mountcastle said to Congress was that these executives would have cooperated against the Sacklers and that they would have moved up the chain in the corporation.”

“The six page memo was written by Kirk Ogrosky. The memo went from Kirk to me – and I approved it. And then it went up to Steve Tyrell and he approved it.”

“It would have found its way to the Assistant Attorney General, who at that time was Alice Fisher.”

What did she do?

“I wasn’t privy to those meetings. Ultimately, my understanding was that the Deputy Attorney General took over the discussions. And for reasons which he didn’t share with my chief – Steve Tyrell, or my deputy chief, Kirk Ogrosky – he decided not to allow the prosecutors to move forward with criminal felony charges against the executives.”

This is from page 276 of the book Empire of Pain: The Secret History of the Sackler Dynasty by Patrick Radden Keefe. 

“Several attorneys who worked with Fisher at the time said that she would not have had the authority to overrule a U.S. Attorney like John Brownlee, and that, as such, she must have been carrying out the orders of her boss, the deputy attorney general, Paul McNulty. Fisher, who rarely speaks about internal deliberations during her time at Justice, made an exception to insist that ‘I did not make or overrule any charging decisions in this case,’ which would seem to indicate that it must have ultimately been McNulty’s call. John Brownlee recalled meeting with McNulty personally, to talk about the case. But in an interview, McNulty claimed that he didn’t make the decision to downgrade the charges against the executives, and indeed, that he was not consulted on it in any way. It was an orphan directive: a backroom deal for which none of these former public servants would take responsibility.”

“All I can tell you is that at that stage it is exclusively the Deputy Attorney General’s decision,” Pelletier said. “I remember in 2007 reading an article in the Washington Post about Mr. Brownlee, the U.S. Attorney, having been already told that he had to take misdemeanor pleas and couldn’t proceed with felony convictions, received a call from the Deputy Attorney General’s office and had a shouting match with Mike Elston about when and if they could actually tender the plea agreements to the misdemeanor counts. It was very clear to me from that article that the Deputy Attorney General’s office had indeed made the decision in this case.”

There are other similar cases where the corporation exerts its influence at Main Justice, most recently the Wal-Mart pharmacy case. In these cases, the company lawyers move up the organization at Main Justice until they get the result they want. 

How often does that go on?

“Main Justice has an important role in reviewing corporate and executive prosecutions. I was asked to weigh in on a number of occasions. And on several occasions it was clear to me that the prosecution that was being sought was misguided in some way. Main Justice plays an important role in these cases.”

“But there needs to be transparency in that process. I have written articles about this. There should be a public reckoning about the decisions and how they are made. Not having a public reckoning and not being accountable to the public about those decisions create the potential for well heeled lawyers and companies to influence the process in an inappropriate way.”

In the Boeing case, you had the U.S. Attorney who cut the Boeing deferred prosecution, going to work for Kirkland & Ellis, the defense firm with whom she negotiated the deferred prosecution agreement. The families were outraged by the U.S. Attorney going to the defense firm within a year of the deferred prosecution agreement, by the lack of transparency, by the lack of any consultation with the victims.

“The revolving door in the Department of Justice is a huge, huge, huge problem of perception if nothing else. The perceptions created by the revolving door and the realities underpinning some of the revolving door hirings create a huge problem for the Department of Justice.”

“I wrote an article earlier this year for the Atlantic magazine titled How to Actually Prosecute the Financial Crimes of the Very Rich. It’s about the failure of the Department of Justice to prosecute high end financial crimes. I focused on the deterioration nationally of the Department of Justice to be able to have the technical skilled capacity to prosecute elite financial fraud. I go into that in explicit detail about why this has happened and what needs to be done to fix it.”

“It continues to be a problem. I was heartened by Deputy Attorney General Lisa Monaco’s comments on prosecuting corporate crime. But memos and comments don’t change the way prosecutors behave.” 

“What bothers me mostly is that elite financial crime, crime by very rich people, doesn’t get prosecuted any more. And I mean prosecuted in an organized way that would be effective in having an impact on those types of crimes. And the reason is fairly simple. It’s about the courage of political leaders and competence. How do we get both line prosecutors and management competent enough to do this?” 

“And finally it’s about commitment. How does the Department of Justice show its commitment to prosecute these cases?”

What about deferred prosecution agreements?

“You and I can have robust discussions about whether deferred prosecution agreements are having the impact that they should have. Corporations can’t go to jail. You can exercise the death penalty or put them on corporate probation.”

“Unless and until you start prosecuting responsible executives, you are never going to change the behavior of corporate executives and elite financial fraudsters.” 

“I don’t disagree that at times there has been abuse of the deferred prosecution agreement process. But in my view, the real problem is the lack of will, ability and experience to prosecute executives and elite financial fraudsters.”

“By not having the capacity to do it or by not having the systems in place to empower prosecutors to do it on a national scale, you end up just playing catch as catch can, and you just have prosecutors go after the low hanging fruit.”

[For the complete Interview with Paul Pelletier, 35 Corporate Crime Reporter 44(13), Monday November 15, 2021, print edition only.]

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