DOJ readying fraud attack
Justice Department looks for a “superstar” to run top-priority cases.
National Law Journal
August 10, 2009
The Obama administration is dramatically beefing up the fraud section of the U.S. Department of Justice’s Criminal Division as it tries to add muscle to back up its rhetoric about cracking down on health care and corporate fraud.
The department is looking for what Assistant Attorney General Lanny Breuer calls “a superstar” to lead the fraud section. It also plans to add 10 trial attorneys and fill the long vacant job of deputy chief for corporate, securities and investment fraud.
That promise of extra bodies is critical: The fraud section is already the Criminal Division’s largest litigation unit. With additional resources and the strong backing of Justice higher-ups for more fraud prosecution, the new chief should become the bane of defense lawyers’ existence nationwide.
In advertising for the post, Justice says the new chief will be “at the forefront of the Department’s efforts” to hold companies and individuals responsible for the economic downturn (where appropriate, of course). The chief will also play a “key role” in developing Justice policy and fraud enforcement initiatives involving millions of dollars — albeit likely not litigating the cases personally. (Traditionally the top working litigators in the fraud section have been the deputy chiefs.)
Fortunately, power and prestige are their own reward. This “rock star” who will bring “cases of extraordinary importance” — Breuer’s words again — can look forward to a government salary between $118,000 and $177,000, depending on experience.
The top fraud slot opened up last month when Steven Tyrrell, section chief since 2006, announced he was stepping down. Justice officials won’t talk about who might have already expressed an interest in running the section. An outside hire plucked from Big Law without a deep background in fraud prosecution would rankle career prosecutors, according to one Justice source. But several white-collar defense lawyers are hoping for someone whose experience mirrors their own — an attorney who’s worked on both sides of the courtroom.
Breuer, who oversees the Criminal Division, said he’s been talking to U.S. attorneys and private practitioners, including former colleagues, about his plans to bolster the fraud section. He said he wants the section, which has 57 attorneys now, to grow. “We’re aggressively and zealously pursuing this hiring initiative,” said Breuer, whom the Obama administration brought over from Washington-based Covington & Burling.
“I understand him to be looking for a well-qualified chief who is not a member of the fraud section,” said Bruce Baird, chairman of Covington’s white-collar practice, who worked with Breuer in private practice. “He’s spreading the word quite widely. He’s reaching out,” said Baird, who declined to discuss whether he’s playing any role in the search for a section chief.
As for the 10 trial-lawyer slots, the pitch to young associates, assistant U.S. attorneys and federal agency lawyers (especially Securities and Exchange Commission attorneys, a go-to source for the fraud section) is simple: The fraud section is the career-defining place to be.
EMPHASIS ON HEALTH
Fraud section attorneys are often described as a “rapid response team” that jumps into districts around the country to target the hot crime of the moment. Five of those 10 trial lawyers would be assigned where needed, said Justice officials.
But the other five spots are new positions dedicated to the prosecution of health care fraud. Attorney General Eric Holder Jr. has declared the fight against health care fraud to be a top priority.
Justice is not shy about hyping the numbers on its health card fraud enforcement success so far: more than $14 billion won in criminal fines and civil settlements since 1997. In just the past two months, Justice has announced indictments charging 85 defendants in Detroit and Houston for alleged schemes that bilked the government of more than $65 million in fraudulent Medicare claims.
The most recent indictments are the work of strike force teams sent out from Main Justice to jointly prosecute health care fraud with local U.S. attorney’s offices in those cities. (The U.S. Department of Health and Human Services also plays a role.) The Detroit and Houston teams follow on highly successful strike forces that parachuted into Miami and Los Angeles in recent years. More trial attorneys could allow the section to broaden the geographic scope of those efforts, said several Justice officials.
Detroit needed the help. Assistant U.S. Attorney F. William Soisson, who manages health care fraud cases for the Eastern District of Michigan, said his office last year asked for assistance from Justice. “We just didn’t have a sufficient number of attorneys to rapidly prosecute [health care fraud] cases,” Soisson said. “One person couldn’t indict all these people.”
It is critical for the newly hired Main Justice prosecutors to be able to cooperate with the assistant U.S. attorneys in the field, said several former Criminal Division supervisors. Soisson said his office has had no problems working with the fraud section attorneys in part because Justice lawyers agreed to follow local rules and procedures on discovery and motions practice.
“The section is performing its best when it works in partnerships,” said Christopher Wray, a former assistant attorney general for the Criminal Division who is now a partner in the Washington and Atlanta offices of King & Spalding.
The defense bar raises the concern that adding more prosecutors and launching more strike forces will inevitably mean that Justice starts trying to turn minor, inadvertent violations of complex health laws into major litigation and press-release-worthy settlements. Prosecutors live to prosecute, especially young lawyers told they’re bringing “cases of extraordinary importance” aimed at reaping millions for the American taxpayer. So defense lawyers counsel caution.
“When the statistics drive the effort, you run the risk of sweeping in otherwise explainable, innocent or nonfraudulent conduct,” warned Gibson, Dunn & Crutcher partner Robert Blume of the Los Angeles-based firm’s Washington and Denver offices.
THE CHIEF IS KEY
But negativity about enforcement does not fit the mood of the fraud section today. Tyrrell, who is leaving for private practice after 20 years as a federal prosecutor, said the section “will continue to do incredible work under Lanny.” Tyrrell said he’s leaving now for personal and professional reasons but is planning to stick around to help his successor make the transition.
It’s key, said several white-collar defense lawyers, to get that chief and deputy chief in place before seeking to sign up the 10 trial attorneys who will work for them. In recent years, a number of trial attorneys have joined the Criminal Division from Miami, and that wave began with the naming of supervisors from Miami. “One brought another and word circulated,” said Joshua Hochberg, who spent seven years as fraud section chief before joining McKenna Long & Aldridge’s Washington office in 2005.
Among others, Paul Pelletier, the current principal deputy chief for litigation in the fraud section, jumped to Justice from Miami in 2002. Pelletier in turn recruited the section’s deputy chief for health care fraud, Kirk Ogrosky, in 2006. Ogrosky had once been an assistant U.S. attorney in Miami — although he came to Justice directly from the Washington office of New York-based Skadden, Arps, Slate, Meagher & Flom. Ogrosky is given a major share of the credit for directing new health care fraud prosecutions.
With the new fraud section leaders on board, the rest of the hiring binge should go more smoothly. As former U.S. Attorney Lawrence Finder, now a partner in the Houston office of Dallas’ Haynes and Boone, put it: “There are a lot of young associates in big firms and smaller firms who would love a crack at the Justice Department.”
Mike Scarcella can be reached at email@example.com.