Preet Bharara: One of the world’s top complex crime prosecutors

By December 8, 2013 Uncategorized No Comments
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Updated 12/15/13: NEW YORK – Recognized worldwide for his prowess in fighting 21st-Century crime, New York-based Preetinder Singh “Preet” Bharara has launched a Complex Frauds Unit, successfully prosecuting numerous political corruption cases. His office is prosecuting the recent Malcolm Smith election fraud case, demonstrating a complex web of bribes paid in connection with Democratic politician Malcolm Smith, to Republican Party officials with the intent to obtain for Smith the Republican spot on the ballot in an election for New York City Mayor.1

Under Bharara, a number of prosecutions have succeeded in the areas of election fraud, corruption, Wall Street malfeasance, money laundering, and computer hacking; he also successfully prosecuted members of the Gambino crime family.2 Among Bharara’s high profile cases: liquidation and victim restitution for the billion-dollar Bernie Madoff Ponzi scheme.3

If the two most important anti-corruption measures are transparency and enforcement, look at the work by Bharara for an example of enforcement. Named by Time Magazine as one of the “World’s 100 Most Influential People for 2012,”4 Bharara created the Complex Frauds Unit to deal with the often byzantine, technical, and overlapping-jurisdictional problems in today’s financial and cybercrime corruption.

Bharara’s office prosecuted seven defendants for operating an Internet fraud scheme that infected more than four million computers worldwide, manipulating Internet advertising business, and was also involved in the indictment against suspected hackers of the LulzSec group5, along with a hacker theft of Federal Reserve software.6

The Civil Frauds Unit, a partner unit with the Complex Frauds Unit, has brought cases against Deutsche Bank, Allied Home Mortgage, and CitiMortgage.

Bharara has also filed money laundering charges against Liberty Reserves S.A.,7 in what has been described as “the biggest-ever international money-laundering scheme”; the $6-billion Costa Rican money laundering operation was being used worldwide by crime syndicates.

[blue_heading]Among Bharara’s public corruption prosecutions:[/blue_heading]
  • Democratic New York State Senator Malcolm Smith
  • New York City Republican county leader Vincent Tabone
  • New York City Republican county leader Joseph Sabino
  • New York City Councilman Dan Halloran
  • New York Democratic Assemblyman Eric Stevenson
  • New York Assemblyman Nelson Castro
  • New York State Senator Carl Kruger
  • New York Senator Vincent Leibell
  • New York Senator Hiram Monserrate
  • Spring Valley, New York village Mayor Noramie Jasmine
  • Deputy Mayor of the Village of Spring Valley Joseph Desmaret
  • Yonkers City Councilwoman Sandy Annabi
  • New York Assemblyman Nelson Castro

He also prosecuted a massive, systematic system for overbilling by government contractors in the CityTime Project, involving a network of shell companies and bank accounts both in the US and abroad, used to launder over $40 million in kickbacks. That prosecution also netted a $500 million forfeiture from SAIC for its connection with the CityTime project.8 (SAIC, in 2003, was also connected with an evaluation of the Diebold voting system.)

Bharara’s office indicted the former Democratic Majority Leader of the Yonkers City Council Sandy Annabi for receiving more than $160,000 in secret payments. He also indicted Zehy Jereis, the former head of the Yonkers Republican Party, and Anthony Mangone, a Westchester County attorney, for conspiracy, bribery, and extortion in connection with two real estate development projects within the City of Yonkers pending before Annabi.9

His prosecution of New York City Councilman Larry Seabrook pertained to Seabrook’s solicitation of $50,000 in secret payments for influencing a subcontract award at the New Yankee Stadium, and for fraudulently steering more than $1 million in New York City Council discretionary funds to nonprofits controlled by Seabrook, to benefit his friends and family.10

Bharara’s office indicted former New York State Senator Hiram Monserrate for abusing New York City Council discretionary funds to advance his own political campaign; Monserrate misused more than $100,000 in discretionary funds by directing them to a New York City non-profit to finance his failed 2006 campaign for the New York State Senate.11

In October 2013, Bharara indicted political consultant Melvin Lowe, alleging that Lowe defrauded the New York Democratic Senate Campaign Committee and its contributors of $100,000 by causing a vendor to submit a false invoice for printing services.12

Bharara works closely with the FBI, which investigates and develops evidence on complex fraud involving banking, securities, and computer hacking. But in August 2013, Bharara even indicted a former FBI agent, Robert Lustyik, a White Plains special agent accused of soliciting bribes in exchange for providing a suspect with confidential internal law enforcement documents.13

Mario Villanueva Madrid, a former governor of the Mexican state of Quintana Roo, was prosecuted by Manhattan’s Bharara, and in June 2013 was sentenced to 11 years in prison for money laundering, through banks in New York and other countries, in connection with narcotics bribes received from the Juarez Cartel, one of Mexico’s most notorious and violent drug trafficking syndicates.14

Former Guatemalan president Alfonso Portillo has now been charged by Bharara’s office with laundering millions of dollars from the Government of Guatemala through bank accounts located in the US. Portillo’s extradition was announced in May 2013.15

In March 2013, Bharara’s prosecution of a candidate’s campaign treasurer and her cohort culminated in guilty pleas. Jia Hou, a/k/a/ “Jenny Hou”, and Xing Wu Pan, a/k/a “Oliver Pan” were found guilting of a fraudulent scheme involving use of straw donors to funnel large, illegal campaign contributions to former Controller John Liu, who was running for New York City Mayor.16

Bharara has also successfully prosecuted several Swiss bankers17, and also labor union leaders who stole funds from their membership.18

You may be wondering, “Then why haven’t more Wall Street investment bankers gone to jail?” In fact, quite a few of them are being prosecuted; Bharara has also launched actions against a large number of well-known banks and investment houses, many of them in connection with the kind of behavior that led to the global economic meltdown in 2008. As you read the indictment papers, however, you see the vast amount of time and manpower needed to bring down even a single corrupt official.

When the US Congress imagined that it was addressing investment banking fraud, or at least, marketed its efforts as such, prosecution efforts were budgeted to cost at least $165 million.19

After loudly passing legislation to combat financial fraud, Congress quietly cut the budget for the entire United States to just $30 million, an amount that would elicit hardly a blink from Goldman Sachs. As the newsman in HBO’s fictional series “The Network” commented, in this case non-fictionally, “The US government is being outlawyered.”

Curtailing election fraud need prosecutors with the backbone, smarts, and willingness, to tackle complex corruption cases. For this reason, it’s worth paying attention to whose name is at the top of politically sensitive indictments.

Dec. 15, 2013: Added NOTES

NOTES:

  1. Complaint against Malcolm Smith et. al., US District Attorney Southern District of New York, 03/29/2013, http://www.scribd.com/doc/133604402/Smith-Malcolm-Et-Al-Complaint
  2. US Department of Justice: Manhattan US Attorney Charges 26 Gambino Crime Family Leaders, Members, and Associates on Racketeering, Murder, Narcotics, Firearms, and Other Charges, U.S. Attorney’s Office – Southern District of New York, 01/20/2011, http://www.justice.gov/usao/nys/pressreleases/January11/gambinotakedownpr.pdf
  3. US Department of Justice: Manhattan US Attorney Announces Agreement to Recover $7.2 Billion for Victims of Bernard L. Madoff’s Ponzi Scheme, U.S. Attorney’s Office – Southern District of New York, 12/17/2010, http://www.justice.gov/usao/nys/pressreleases/December10/picowerforfeituresettlementpr.pdf
  4. Viet Dinh: The World’s 100 Most Influential People: 2012 – Preet Bharara, Time Magazine, 04/18/2012, http://content.time.com/time/specials/packages/article/0,28804,2111975_2111976_2112129,00.html
  5. US Department of Justice: Six Hackers in the United States and Abroad Charged for Crimes Affecting Over One Million Victims, U.S. Attorney’s Office – Southern District of New York, 03/06/2012, http://www.justice.gov/usao/nys/pressreleases/March12/ackroyd.html
  6. US Department of Justice: Computer Programmer Pleads Guilty In Manhattan Federal Court To Stealing Proprietary Code From The Federal Reserve Bank Of New York, U.S. Attorney’s Office – Southern District of New York, 05/29/2013, http://www.justice.gov/usao/nys/pressreleases/May12/zhangboplea.html
  7. Preet Bharara: United States of America v. Liberty Reserves et. al., UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK, 05/29/2013, http://www.scribd.com/doc/144278954/Unsealed-Liberty-Reserve-Indictment
  8. US Department of Justice: Manhattan US Attorney Announces Charges Against Four New Defendants in an Unprecedented Scheme to Defraud New York City in Connection with CityTime Project, U.S. Attorney’s Office – Southern District of New York, 06.20/2011, http://www.justice.gov/usao/nys/pressreleases/June11/citytimes2indictmentpr.pdf and Press Release: US Department of Justice: Science Applications International Corporation Enters into Agreement with manhattan US Attorney’s Office to Forfeit More Than $500 Million in Connection with CityTime Project, U.S. Attorney’s Office – Southern District of New York, 03/14/2012, http://www.justice.gov/usao/nys/pressreleases/March12/saicdpa.html
  9. US Department of Justice: United States Attorney Charges Former Democratic Majority Leader of Yonkers City Council, Former Yonkers Republican Party Chief, and Attorney with Public Corruption Crimes, U.S. Attorney’s Office – Southern District of New York, 01/06/2010, http://www.justice.gov/usao/nys/pressreleases/January10/annabisandyetalindictmentpr.pdf
  10. US Department of Justice: Bronx City Councilman, Larry Seabrook, Found Guilty In Manhattan Federal Court On Nine Counts For Public Corruption Crimes, U.S. Attorney’s Office – Southern District of New York, 07/26/2012, http://www.justice.gov/usao/nys/pressreleases/July12/seabrooklarry72612verdict.html
  11. US Department of Justice: Former New York State Senator And City Council Member Hiram Monserrate Sentenced In Manhattan Federal Court To Two Years In Prison For Fraud, U.S. Attorney’s Office – Southern District of New York, 12/11/2012, http://www.justice.gov/usao/nys/pressreleases/December12/MonserrateSentencingPR.php
  12. US Department of Justice: New York Political Consultant Is Charged In White Plains Federal Court With Defrauding The New York Democratic Senate Campaign Committee And Other Frauds, U.S. Attorney’s Office – Southern District of New York, 10/29/2013, http://www.justice.gov/usao/nys/pressreleases/October13/LoweMelvinComplaint.php
  13. US Department of Justice: Robert Lustyik, Former FBI Special Agent, And Two Co-Conspirators Charged In White Plains Federal Court With Bribery Scheme, U.S. Attorney’s Office – Southern District of New York, 08/02/2013, http://www.justice.gov/usao/nys/pressreleases/August13/ComplaintLustyikEtAl.php
  14. US Department of Justice: Former Governor Of Mexican State Sentenced In Manhattan Federal Court To 131 Months In Prison For Money Laundering In Connection With Narcotics Bribes, U.S. Attorney’s Office – Southern District of New York, 06/28/2013, http://www.justice.gov/usao/nys/pressreleases/June13/VillanuevaMadridSentencingPR.php
  15. US Department of Justice: Manhattan U.S. Attorney Announces Extradition Of Former President Of Guatemala, Alfonso Portillo, On Money Laundering Charge, U.S. Attorney’s Office – Southern District of New York, 05/28/2013, http://www.justice.gov/usao/nys/pressreleases/May13/PortilloAlfonsoExtraditionPR.php
  16. US Department of Justice: Former Campaign Treasurer And Fundraiser Found Guilty In Manhattan Federal Court Of Campaign Finance Fraud , U.S. Attorney’s Office – Southern District of New York, 05/02/2013, http://www.justice.gov/usao/nys/pressreleases/May13/XingWuPanandJiaHouVerdictPR.php
  17. US Department of Justice: Manhattan US Attorney Forfeits Over $16 Million Seized from Indicted Swiss Bank’s US Account, U.S. Attorney’s Office – Southern District of New York, 04/24/2012, http://www.justice.gov/usao/nys/pressreleases/April12/wegelinforfeiture.html and: US Department of Justice: Manhattan U.S. Attorney Charges Three Swiss Bankers With Conspiring To Hide More Than $420 Million In Swiss Bank Accounts, U.S. Attorney’s Office – Southern District of New York, 12/19/2012, http://www.justice.gov/usao/nys/pressreleases/December12/FellmanetalArrestPR.php
  18. US Department of Justice: Former VA Hospital Workers Union President Pleads Guilty To Theft Of Union Funds In Manhattan Federal Court; Former Stage Union President Sentenced For Embezzling Union Funds, U.S. Attorney’s Office – Southern District of New York, 02/14/2013, http://www.justice.gov/usao/nys/pressreleases/February13/McNameeSentencePetroPlea.php
  19. See Connaughton, Jeff. The Payoff: Why Wall Street Always Wins. Easton Studio Press (2012)

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